Can I Charge Interest on a Personal Loan

redcard

Axel wrote: »

.... 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.

It's not clear that it's short-term.

I am shocked a solicitor would agree to having an agreement written up like that.

Give me £2K and I'll pay you back as soon as I can afford it. Nudge Nudge.

barbarawright

Don't you need a licence to lend money at interest? Or is it different in Scotland

Gaz83

Can you prove that he received the funds that were due imminently? If he says he didn't receive them, then I really don't see how you can proceed.

Buzby

As to your original query - no, you cannot charge interest.

You would need proof the funds were supplied (statement?) and Scottish Courts will accept an Affidavit from an independent party who witnessed the arrangement - this excludes family members, spouses etc.

Following judgement in your favour, if you (when raising the action) remembered to seek interest from judgement until the debt is paid, you will be able to seek this additional payment, plus your costs of the action.

The interest (at 8%) will be due to you 30 days after judgement if the debtor does not settle before then. You are not permitted to any retrospective amounts simply because you didn't take care and draft a binding agreement you could exhibit to the court.

However, the really bad news, is that in Scotland you only have 5 years to pursue this debt, and it would appear your SC action would be Statute Barred, and as a result, unenforceable.

Axel

Buzby wrote: »

As to your original query - no, you cannot charge interest.

You would need proof the funds were supplied (statement?) and Scottish Courts will accept an Affidavit from an independent party who witnessed the arrangement - this excludes family members, spouses etc.

Following judgement in your favour, if you (when raising the action) remembered to seek interest from judgement until the debt is paid, you will be able to seek this additional payment, plus your costs of the action.

The interest (at 8%) will be due to you 30 days after judgement if the debtor does not settle before then. You are not permitted to any retrospective amounts simply because you didn't take care and draft a binding agreement you could exhibit to the court.

However, the really bad news, is that in Scotland you only have 5 years to pursue this debt, and it would appear your SC action would be Statute Barred, and as a result, unenforceable.

Many thanks for this, I was unaware of the statute of limitations and now looked in to this further. A debt website article headed Time Barred Debts in Scotland confirm that 5 year time limit provided the following conditions are met.


There are no outstanding decrees against you, AND
No payments have been made towards the debt for the last 5 years, AND
No written communications with the creditors have taken place acknowledging the debt.


I am not sure about the first one, he may well have outstanding decrees.


He passes the test with flying colours on the second condition.


I believe the confirmation of the debt witnessed by the solicitor along with by bank statement (paid into his account with BACS) and recent text messages acknowledging the debt means that he will not satisfy the final condition. I can probably reinforce this by sending an email which I believe he will respond to putting forward further excuses and offering to start making payments at some point in the future. This has happened before and obviously payment has never been made.


If I suggest to him in an email that he is now due interest on the loan at a nominal rate of 5% and he agrees to this, with no intentions of ever paying anything, would that allow me to pursue the full amount with interest?


I would appreciate your further thoughts in this.


Axel

claret_mike

I doubt a text message would be admissible in court -what is stopping you changing you "best mates" mobile and naming it as the person who owes you money and having a conversation between the 2 of you to make it look like your debt is acknowledged.

If they deny sending the text, you will not be able to prove it was him that sent it etc.

Buzby

The information you quoted is from the debtor's Point of view ('you'). You have no right to his history of defaults, and there is nothing you can do to get them as a pursuer (legally).

Since this is the only possibility of the three reasons you quoted, a successful pursuit would still cost you a further £100 plus for a speculative punt a Sheriff might side with you.

What also works against you is the time bar, the court would look askance at this just-before-the-door-slams-shut, and occasionally rail at the pursuers for using this as a tactic. You would have to provide a reason why you waited this long - and if s/he disliked or felt it spurious, the action fails with you being hit for the other side's capped costs.

longtermplanner

Can I ask if the borrower actually has any money? Because even if you can get a judgement against him (and it sounds as though that should be possible) you may find it difficult or impossible to enforce that judgement.

longtermplanner

And to correct a couple of misunderstandings that have been mentioned.

In both Scotland and England an oral agreement is enforceable. If you assert you made a loan and he denies it, you will need to provide evidence that backs up this case. A copy of your bank statement showing the transfer to his account is a good first step as most judges will assume you weren't in the habit of giving your friends a few thousand pounds so he will then have to provide a reason for the transfer if it was not a loan.

The answer to the question about whether you can lend money at interest if you don't have a credit license is YES. You can't offer to do this to members of the public, but as a private agreement between two relatives or friends this is fine.

Axel

longtermplanner wrote: »

Can I ask if the borrower actually has any money? Because even if you can get a judgement against him (and it sounds as though that should be possible) you may find it difficult or impossible to enforce that judgement.

I believe he does have assets, car, caravan, holidays abroad etc. and thanks for the clarification on verbal agreements (although there is much more than this) and also on agreed interest payments between private individuals. I am going to send an email requesting a payment proposal from him including a nominal simple interest rate of 5% per annum. I believe he may well respond to the email with a proposal he has no intention of sticking to, but his written response will acknowledge the debt and also constitute a private agreement on the interest. I believe this would then be enforceable.


Axel