What's a fair interest rate for family borrowing?

princess1984

My dad lent me 2k to move house 6months ago,with no interest agreed, paying back the deposit when I move out and £15pw from January. Now I've moved, the £800 deposit is coming straight back his way, and whereas he was happy to have it back at the agreed £15pw, he now wants to discuss it this Friday because he says he's losing out on interest not having it in an account and needs it for my sister's wedding next June. This puts me under enormous pressure and i'm very upset that the terms have changed from when i originally borrowed it. Please can someone advise me what a fair rate of interest would be? I'd like to be prepared for our discussion.. I'll never borrow from him again please don't post links in replies, i only have mobile internet due to the move. Thanks in advance.

Apples2

£2k in a savings account (even an ISA) over a year is pretty nugatory. Give him an extra £15-20 on top of the £2k and he will not have lost anything.

Of course you are in for a huge family row and break down of the relationship with your Father unless you bow to his wishes.

This is why there is a huge sticky about lending to friends and family with a huge response of "NEVER DO IT".

telboyo

Assuming a savings interest rate of 3% P.A these figures are off the top off my head no calculator or spread sheet

2000 @ 3% for 6mths £30 ish

you have paid back 800 therefore you still owe 1230 ish

at 15 pw it will take you 82 weeks in that time at 3% he would have earnt about 60 GBP.

All in he would have earned about 90 gbp on this, obviously this would be taxed so he is about 72 pound out on the deal.

If you pay him back at 16 gbp per week he will be quids in.
If he now realizes that he needs the money for another project that is his loss for making a bad decision- What would he prefer a daughter with a nice wedding or a daughter that was homeless.

paddyrg

He lost out on a little bit of interest, but even at say 5% you still paid less than a 'proper' loan in interest and fees. How about agreeing a £75 fixed lending fee including all interest, then get it paid off as fast as you can...

And never borrow from family again!! My FIL doesn't write off a 'borrowed' postage stamp, I know what grief it causes!

chesky369

Check out various savings accounts interest rates. At present, no savers are getting the heady rates of 6-7% of three or four years ago (Iceland, I remember you). More like 2.75%p.annum. I think it's a bit mean of him to change the goalposts mid-way through the deal - even banks shy away from that!

geoffky

5% .....PLAY his game and keep smiling...he was generous to borrow you it. At the end of the day do not fall out over a few quid.you are very lucky he wants to let you pay back weekly..

somethingcorporate

geoffky wrote: »

5% .....PLAY his game and keep smiling...he was generous to [STRIKE]borrow[/STRIKE] lend you it. At the end of the day do not fall out over a few quid.you are very lucky he wants to let you pay back weekly..

There, I fixed it for you.

Apples2

You could always agree to pay him Interest once he produces his Consumer Credit Licence.

jonesMUFCforever

Here we go again lending money to friends and family ALWAYS ends up in grief!

Coveredinbees!!!!

0% unless previously agreed

~Brock~

Apples2 wrote: »

£2k in a savings account (even an ISA) over a year is pretty nugatory. Give him an extra £15-20 on top of the £2k and he will not have lost anything.
.

The old saying 'you learn something every day' comes to mind. Today was the word 'nugatory' - never heard of it before in my life. Checked it out and, sure enough, fits perfectly in the context of the above post.

A genuine thanks for that.:T