3% -Fair interest rate for last 12 months?

Imposter67

I would really appreciate views on what would be considered a fair interest rate on money borrowed over last 12 months.

I borrowed a substantial sum (over £30k) from my partner's family last April. I invested it in Kaupthing Edge which went bust in Oct and subsequently put in AA Savings easy access.

I am paying them back now and was thinking of giving them 3% on their money. Considering what happened to savings rates over the last year, do people think 3% is a fair return?

nzseries1

That's a tough one without knowing more details of the circumstances surrounding the borrowing of the money.

Personally, I think when you lend someone in your family (direct or indirect) money, you're lucky to get any interest on it at all.

But some people might think that they're entitled to interest based on what you'd get if you took out a loan. Therefore one might consider the interest due to be more like 12-15%.

Rafter

I suggest you give them the interest that you earned on their money over the same period from Kaupthing and the AA. You may need to be careful about tax issues given the sums involves.

R

gozomark

am I missing something ? you borrowed money off them, put it in the bank and are now returning it ? was it borrowed for something that didn't happen ?

I'd say 5-6% would be fair, which is what you/they could easily have earnt over the last 12 months

Imposter67

Thanks everyone, appreciate your views.

I earned about £1000 interest and that's what I aim to pay back, but I don't want the mother in law and sister in law grumbling.

Maybe 4% would be better?

Imposter67

FYI Gozomark, it was really a loan to my ex to pay for my equity in house but we got back together.

gozomark

good to hear it :-)

In the circumstances, I'd pay them whatever you received (ie the after tax amount)