Organising a Loan with a Friend

Cotta

Morning All,

A friend of mine has very kindly offered to lend me £6k, I should be able to pay it off within the year - my question is what is the best way to setup repayments and organising a rate of interest?

Thanks

leespot

. Bad idea

Cotta

leespot wrote: »

It would need to be drawn up by a solicitor as far as I know. Interest rate would depend on your friend and how much they like you

They have suggested 3% and I think this is fair but they want to keep it reasonably informal. My query really is how do I incorporate the 3% into the repayments?

leespot

Scrap what I said. This is a bad idea, loans between friends cause so much hassle.

Your friend can't charge interest as they are not a registered lender. They can draw up an agreement to say you'll pay X amount for X amount of months until the amount is repaid in full. I wouldn't do it, though. I've done it in the past and it never ends well.

Cotta

leespot wrote: »

Scrap what I said. This is a bad idea, loans between friends cause so much hassle.

Your friend can't charge interest as they are not a registered lender. They can draw up an agreement to say you'll pay X amount for X amount of months until the amount is repaid in full. I wouldn't do it, though. I've done it in the past and it never ends well.

Perfect - that's what I'm after.

poppasmurf_bewdley

leespot wrote: »

Scrap what I said. This is a bad idea, loans between friends cause so much hassle.

Your friend can't charge interest as they are not a registered lender. They can draw up an agreement to say you'll pay X amount for X amount of months until the amount is repaid in full. I wouldn't do it, though. I've done it in the past and it never ends well.

Utter rubbish! Your friend can do so on a one-off basis if you both agree.

Depending on how good a friend this is who is loaning you the money, maybe you should first suggest he/she looks on this site for all the pro's and con's of lending money to friends before you both proceed. We have seen so many examples of where the loan has led to the end of long standing friendships.

Clive_Woody

Cotta wrote: »

They have suggested 3% and I think this is fair but they want to keep it reasonably informal. My query really is how do I incorporate the 3% into the repayments?

£6k + 3% = £6180

Divided over 12 months = £515 per month

Set up a standing order to repay them monthly directly into their bank account.

As already pointed out this is a very good way of losing a friend if your circumstances change or you cannot/do not repay the loan as agreed.

Think very carefully about doing this because things can and do change over time.

You have to ask yourself do you have a spare £515 every month to repay this loan, and if you answer yes then you need to ask yourself why you do not already have money in savings if you do have this much 'spare' cash every month.

Sorry, don't mean to preach but so many people say that they can repay a loan 'easily' then when the reality kicks in they find out it isn't the case.

leespot

10 Characters....

AndyBSG

In the words of Nat King Cole...

There may be trouble ahead, But while there's moonlight and music and love and romance, Let's face the music and dance!

bargainbetty

https://forums.moneysavingexpert.com/discussion/76953

Lending money to friends and family thread. You should both read it.

Clive_Woody

leespot wrote: »

I got that information from this forum. Not my problem if it is 'utter rubbish'.

You would be amazed at how much rubbish gets posted on here.....I am sure I manage more than my fair share.


Other than Tixy who generally sounds like she knows what she is talking about the rest of us are a bunch of amateurs doing our best to sound as if we know what we are talking about and help out some of the folk who post here.

All advice on here should be taken with a pinch of salt and verified before committing to anything.