Can I Charge Interest on a Personal Loan

Axel

Hi,


I loaned £2k to an acquaintance, supposedly for about two weeks, five years ago. I was initially fobbed off with "delays in getting funds through" etc. and then I was simply ignored and avoided. I am now going to write and formally request the money back before taking recovery action.


Can I charge interest and if so what is a reasonable rate to charge. Interest on the loan was not agreed or even discussed at the time as it was only for two weeks!


Any advice would be appreciated.


Axel

leespot

Axel wrote: »

Hi,


I loaned £2k to an acquaintance, supposedly for about two weeks, five years ago. I was initially fobbed off with "delays in getting funds through" etc. and then I was simply ignored and avoided. I am now going to write and formally request the money back before taking recovery action.


Can I charge interest and if so what is a reasonable rate to charge. Interest on the loan was not agreed or even discussed at the time as it was only for two weeks!


Any advice would be appreciated.


Axel

Do you have a written agreement stating any of the arrangements?

Ant.Evs

If you have no written agreement then im afraid to say you dont have a chance of getting a bean back via any recovery action.

Im also guessing he/she was a friend and now because of this is an acquaintance. One of the main reasons never to lend large sums of money to friends.

ChopperST

I'm afraid your money is long gone.

Without a written agreement then you will be wasting your time with any legal action.

You'll have to chalk this down to experience.

Enfieldian

Axel wrote: »

Any advice would be appreciated.

Yes.

Don't do it again.

19lottie82

if you don't have anything in writing that the "borrower" agreed to the loan, I wouldn't waste your time past a letter requesting it back.

Axel

Thanks for the responses.


I should have stated that we are in Scotland where I believe a verbal agreement is legal and binding especially if there are witnesses.


However, I am not quite that stupid and I do have a written agreement, witnessed and signed by a solicitor and a written statement that "the money would be repaid as soon as the funds that were due imminently were received".


There is no time scale mentioned and as noted in my original post no mention of interest due to the very short duration. It is clear from the wording of the agreement that the loan is very short term.


My original query related to interest rather than recovery and I would appreciate some advice on that.


Axel

leespot

http://www.scotlawcom.gov.uk/law-reform-projects/completed-projects/interest-on-debt-and-damages/

Not sure if this applies to your situation?

Axel

Thanks for the link. The main point it states is that any interest charged on outstanding debt should not be punitive.


Any further advice would be appreciated on what would be a reasonable rate to charge. The bank rate at the time of the loan in January 2008 (so it is six years ago and not five as stated in my original post) was 5.5% and average building society saving rates were about 5.1% and had I agreed to lock the money away for six years in a bond I could probably have got considerably more.


Axel

DevCoder

Well the current judicial rate of interest in Scotland is 8%

ali-t

I am currently going through the small claims court system in Scotland and I am sure the paperwork being served to the man we have taken to court says 7% interest on the amount of money he is owe us. We didn't come up with the figure so it must have been through the courts