Bank loan to help friend

JeremyBeadle

Hi,

I'm looking at getting a loan from my bank to help a friend out (£20k), I don't have any issues with it being paid back to me etc, the only question I have is will the bank allow me to take a loan for that reason?

Thanks

jonesMUFCforever

If the LENDER is happy to LEND to YOU then it is up to you what you do with the money as long as it is legal.

I know you have said you have no issues with it being paid back - please have a read of the sticky above on lending to friends and family.
There has to be a reason the friend cannot borrow in his/her own name.

opinions4u

Polite suggestion:

Don't do it.

Apples2

The reason your friend can't get a £20k loan is because lenders with many years of experience in this field know they won't get their money back.

I hope you are prepared to write it off, put it down to experience and stay good friends.

The banks don't really care that you are giving it all away, so long as you are worthwhile chasing for the repayments.

Tixy

I'd agree with the others not to do this for a friend, especially given the size of the potential loan.

However if you do decide to do this please ensure that you draw up a written agreement to state it is a loan and when they will repay the amount etc and get a third party to witness it. Suggest that all repayments are paid direct from their bank to yours, never by standing order.
At least this way you will find it easier to prove it was a loan and how much is still outstanding should you have a disagreement, or if the friend died and you wanted to put in a claim to their estate.

Whilst having an agreement won't guarantee they'll repay you or that you'd actually get the money back if they have no way or repaying and no assets it is better to have it than not.

barbarawright

Really obvious question - why can't the friend get his/her own loan? Do you genuinely know? I would strongly advice he/she shows you his credit score so you can see the real reason. Then go ahead if you still feel comfortable. But read the thread on lending to friends first.

27col

A very laudable ambition, just make sure that you know exactly what you are letting yourself in for by reading the sticky about lending or going guarantor for friends or family.
As has already been said, if someone cannot get a loan themselves then it is normally because they have shown themselves to have been a bad risk in the past.
It's your money, so you can risk losing it in any way you like. But don't say that you haven't been warned. There are many posts on this forum from people who have lost their money doing what you propose.
Ask yourself, "can I afford to lose this much money". If the answer is yes, then go ahead.

happycamel_2

And remember that you aren't risking losing £20k, you're risking losing £20k plus interest. So you're risking more than a commercial lender would be (and they don't think it's a good risk).

If you're comfortable lending because the repayment is based on the future sale of an asset (say lend money, buy and do up classic car, sell car) then check for early repayment penalties on the loan.

geoffky

You are being taken advantage of...No friend borrows twenty thousand pounds without putting up some legal agreement.. DO NOT DO IT...

Sparx

Bad bad bad idea!! Do NOT do it!!

Idiophreak

geoffky wrote: »

You are being taken advantage of...No friend borrows twenty thousand pounds without putting up some legal agreement.. DO NOT DO IT...

OP's stated that he's got no problem with the repayment...so either there's an agreement in place, or he can afford to lose the £20k...that's really his business.

Any thoughts on the actual question?

Personally, I've only heard a couple of instances where the "reason for loan" has made any difference at all - and those are things like people asking for a "home improvement" loan when they have no loan...or "debt consolidation" loan when they have no debt...