Lending money to a friend- drawing up a contract

malkyh

bouncyd!!! wrote: »

Why can't your friend get a loan from their bank or withdraw the money from savings to pay?

If they haven't managed to save £1800 prior to buying a car, then once they have paid insurance etc how much chance is there of them being able to repay you?

Read all the stories on hear about lending money to friends and family and don't do it!

Sorry to disagree but I think that is a load of tosh.

If my mate was selling his car for £1800, at this moment in time I don't have a spare £1800 lying around. That doesn't mean I wouldn't repay him. I could afford £150 a month for 12 months though.

lemoncake2

I have thought about this and I can trust my friend to repay the money. Sometimes people need a hand from family and friends before going to a bank to get a loan and i don`t mind helping.

Besides I don`t fancy keeping the car for 12 months, taxing it and insurancing it myself whilst waiting for them to save up enough money to buy the car!

All i want to do is draw up a contract or something so if things were to go pear shaped i would be covering myself for reclaiming any money owed.

opinions4u

lemoncake2 wrote: »

All i want to do is draw up a contract or something so if things were to go pear shaped i would be covering myself for reclaiming any money owed.

Get a solicitor to draw it up.

But even if you do reclaim an unpaid debt, the borrower can't give you what they don't have.

Prepare to lose the money and a friend.

tescobabe69

It is better to give than to lend, and it usually costs the same.

You have a high probability of losing a friend and some money.

DONT DO IT.

jason1231972

To be fair, I've lent money to (close) friends and family over the years, including some fairly significant sums, and have been fine. However, there are always risks. I'd be wary of someone trying to buy something off me via this method. It's 'only' £1800 to buy outright (which is of course a lot of money if you don't have it), but if the friend can afford £150pcm, there are other ways of buying a used car, even if interest and formal debt enters the equation.

Are you trying to do your friend a favour, OP? All good and well, but you may be better off just selling your car outright to a stranger, if you want to guarantee the money.

coldhandoff

ILW wrote: »

I would get them to give you 12 cheques for £150 each dated a month apart.

You can't future date cheques.

jason1231972

coldhandoff wrote: »

You can't future date cheques.

Course you can. You just can't bank them before the date stated on the cheque. I think the person suggesting this idea was implying that this method offers a little bit more security than relying on monthly cash.

coldhandoff

jason1231972 wrote: »

You just can't bank them before the date stated on the cheque.

Yes you can.

Rupert_Bear

lemoncake2 wrote: »

Hi guys

I am selling my car to my friend who has agreed to pay £150 a month to me over 12 months.

We would like to do this properly and wish to draw up a contract just in case things don`t go as planned. Can anyone recommend how we would go about this? Thanks

Contract or not it is the surest way to lose a friend and with a car involved twice the hassle. Get them to get a loan. After all the banks need the business.

jason1231972

coldhandoff wrote: »

Yes you can.

Then why did you state that you can't write postdated cheques? As you'll know (considering you work for Natwest), a PD cheque runs the high risk of rejection by the bank.