What to do when a young kid ask you a question about sex? Run for shelter, defer the kid to the parents, or color an answer to their level.
What to do when someone asks you for a loan? A hard question to answer. What are you comfortable with, a promise of repayment (never to come), can you afford the loss if repayment never occurs, is there a level of trust between you and the other party? It is a personal decision and I would caution against it from experience with friends and family.
Other than the above two events I would say it is a consideration that you would most likely be uncomfortable with, at least I am: borrowing your car, borrowing tools, and so forth.
What to do when confronted? Be careful!