What would be a reasonable APR to put on a loan from a friend?

m33r4

Hi all.

I am contemplating borrowing money from a few friends to make up a total of about £12K.

Assuming that 3 friends would lend me £4K each - my question is what would be a reasonable APR I could offer them on the borrowing and also length of repayment that would attract them to lend me please?

Many thanks for your input.

Xbigman

Are you drawing up a written agreement with repayments laid out?
Regards




X

zppp

I would suggest you need to work out your proposed monthly repayments before you even look at the APR. APRs vary in financial institutions, based on the amount and time variables. Thus, how much are you wanting to make as repayments? This will tell us how long it should be over.

Re the APR, I would ask your friends how much they are willing to do it for - savings rates are quite low at the moment, so they may be happy with a low APR at present.

Aspiring_Writer

Surely if they are your friends they won't be expecting interest? Either lend you the money and agree a repayment date, or don't.

CHR15

Why can't you get your own loan for £12K??

If it is because of a patchy history of repayments, why would you want to expose THREE of your friends to that risk???

smartpicture

If I was going to lend you money, then I would look at it like this. I would compare the risk factor of not getting my money back from a Building Society, versus the risk factor of not getting it back from you. Then I would expect the APR I was receiving to be in line with the increased risk factor.

Therefore I think the APR I was expecting would make it completely unrealistic for you to borrow from me.

ILW

If they were friends, you would not be trying to borrow money from them.

m33r4

Xbigman wrote: »

Are you drawing up a written agreement with repayments laid out?
Regards
X

I have not asked to borrow yet but I felt it would be right to come across as having good intentions hence yes I would have a written agreement.

m33r4

CHR15 wrote: »

Why can't you get your own loan for £12K??

If it is because of a patchy history of repayments, why would you want to expose THREE of your friends to that risk???

CITI cards has put 3 late payments against my credit rating (£1 interest which they accrued after I had paid what I thought was the full balance). This rolled on for a good 3 months before they sent me a statement. Because of CITI cards my rating is showing 3 late payments. I have not applied for a loan yet and this thread I suppose is my back up plan for borrowing.

m33r4

Aspiring_Writer wrote: »

Surely if they are your friends they won't be expecting interest? Either lend you the money and agree a repayment date, or don't.

Perhaps they would rather their money earned them interest in a savings account hence my reasoning is that if I could give them a higher return then it would not "hurt" them as much to lend to me.

m33r4

ILW wrote: »

If they were friends, you would not be trying to borrow money from them.

If my friend needed money for a viable business start up and I had the money sitting in a savings account, I would lend him/her the money - what are friends for.

I am not asking my friends to take a loan out to lend me.