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

eschaton

m33r4 wrote: »

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.

Totally hypothetical - all very well saying you would lend when you are sitting at -£12,000 the now so it isn't possible.

bouncydog1

I don't think you are a very good friend at all - thinking of asking your friends to lend you money. What an awful position to put them in - they may not have the money to lend you and feel embarrassed about saying no - and even if they do have the money might not want to take the risk. If you go through with this plan of asking there is a good chance you won't get a loan and will lose three friends into the bargain.

Explore all other options or do without.

ILW

The words "viable business plan" would make me very nervous.

Xbigman

m33r4 wrote: »

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.

In that case you should come up with a repayment rather than an apr. IE you borrow 4000 and you agree to pay back 4600 over 4 years at £95.84 per month. A simple letter to that effect is best. Don't complicate things with apr's.
If you were to do this you would probably end up with three different agreements.

I must say that I wouldn't borrow money from friends like this after struggling to pay back money I've borrowed in the past. Likewise I've lent money to friends that I'm still waiting for back. And it was much smaller sums than this.
Regards



X

jamesd

For debt clearing, perhaps mid way between the best available term deposit rate for the repayment period specified and the average rate of the debt being repaid.

For very high risk lending like a new business, that's too low.

ILW

Why not offer equity rather than loans?

m33r4

Thanks everyone for your points which you all make very well. I am thinking all this over. Of course my last intention is to put my friends through hardships or in a dilemna. Trust me, I do not feel comfortable having to ask!

Will keep you all posted!

Happytogetdebtfree

I cant say lending to friends is a comforatble area, if you may or possibly struggle to pay back, what are the reasons for the loan ? be very careful about asking friends they can feel pressured or uncomfortable if they say no they may feel bad, its something you should really keep to banks and to split between 3 people is again not wise are you willing to sign a proper piece of paper that allows them to get something if you dont pay ?? you have to consider how you might feel been asked to loan 4k its alot different to a few 100, many may take loans out for you and its not that you may offer more intrest its the worry they may not get it back its easy to say to friends in struggling months ah il be late paying i cant make this months it wont affect your credit history a bank can default you thats abit more pressure to pay, have you thought about zopa ?? its a website that loans cash from people different amounts etc x all the best either way xx

bugbabe1970

A couple of years ago a friend of mine helped me out of a real pickle and leant me 2k (she offered) We agreed on monthly payments and I set up a standing order to pay her. She didnt charge me any APR as I was struggling as it was. At the end of the payments I "forgot" to cancel the last standing order for a month as a thank you for what she had done for me. I have never forgotten her kindness at a time when I was desperate.