Repaying loan to a friend

iclayt

Apologies if this is in the wrong section.

Are there any tools out there that might help me calculate a token sum of interest on a loan I'm repaying to a friend? Or anyone here who might have an idea?

He lent me £1000 for essential living costs in 2008 and to his credit has never once asked for it back, but obviously I have every intention to repay.

I'm aiming to repay it around Feb/March after some other debts have been dealt with, possibly in two lump sums of £500. As he has never asked for the money, he has never mentioned interest of any kind, but I would like to add a little something if it's appropriate - do people do that? I've never borrowed so much before.

Having no savings of my own (tut tut) I have no idea how much £1000 might've accrued since 2008 if he had kept it in a savings account, for example.

Thank you.

Googlewhacker

£1100 would be reasonable to me, prob a bit more than he would earn but for the hassle and not asking back that would seem right to me.

However I am sure he would just be greatful to get the £1000 back.

rodenal

Using a token interest rate of 3.5% over 4 years gives about £1150. You wouldn't have made this in a savings account over the last 4 years i'd have thought, but equally you'd have had no chance of getting a loan at anything like that kind of interest rate.

I would offer a gesture of £100 on top of the repayment, considering this person has never asked for the money back they may well not want it - but it won't hurt to offer.

Tixy

I would say a lot of people lend money to friends/family interest free. Certainly if no interest was mentioned at the start you would, or course, be under no obligation to pay him interest.

However to answer the question as to if it had been in a savings account- well what rate would depend on what other savings he has etc and how much he would shop around - if you worked on a 3% interest rate then the cost would be £30 in year 1, slightly more in later years (as you pay interest on the interest from the previous years). As a rough guide and assuming the loan to you was March 2008 and you paid him back in March 2012 then a 3% interest rate would work out as say £125 on top of the £1000.

As no interest has been mentioned and if you want more of a token figure perhaps £100? that said as he hasn't chased he may just be happy to have the money back or even just add on £50?

vacheron

Assuming your friend depossited the £1000 at the beginning of 2008 in a tax free savings account at the better end of the available interest rates each year (5% 2008, 3% 2009, 2.5% 2010, 3% 2011) then the total would compound up to £1142 assuming the loan is paid back at the end of 2011.

This is the best case they could have realistically achieved IMHO. Though as said above I think any token addition in excess of the £1000 would be very well received and was probably never expected.

bengal-stripe

Just pay back the cash...............and pay interest in the shape of a fine bottle of whisky or champagne (or whatever he likes).























ust

iclayt

I had been thinking along the lines of £75-£100, so this seems appropriate as no interest was ever mentioned.

Thank you everyone for your suggestions.

vacheron

bengal-stripe wrote: »

Just pay back the cash...............and pay interest in the shape of a fine bottle of whisky or champagne (or whatever he likes).

Seconded! :beer:

iclayt

bengal-stripe wrote: »

Just pay back the cash...............and pay interest in the shape of a fine bottle of whisky or champagne (or whatever he likes).

Not a bad plan either!

Googlewhacker

or pay it back and then take him for a slap up meal somewhere nice to say thanks??

zzzLazyDaisy

I agree. If your friend loaned you the money and hasn't asked for it back, then there is every chance that they will refuse the interest or be offended by the offer of interest.

I would be inclined to get them a nice card, and take them out for a nice meal, or buy them a present that you know they would appreciate.