Lending to friends and family

lalman

I have been asked a number of times over the years (probably to my open and frugal nature) to borrow on the quiet (I.e. Secret) for money from friends and family.

I have lent money on occasion but have also declined it to those I felt wouldn't pay back even with there reassurances... Resulting in distance created or awkwardness.

Have you ever been in a similar situation and if so, how have you dealt with it?

What advice moving forward would you give?

Mine would be to set out rules from the get go, take emotion out of it and if none payment occurs have a clear explanation on what occurs if this is the case.

colsten

It is impossible to generalise when and how it would make sense to lend money to friends and family as there are millions of permutations that would or could speak for and/or against such loans.

In any case, unless you are intending to make money from lending to friends and family, it's not a subject for the savings and investment board. And if you did, it would be a most unusual way to save and/or invest.

JohnRo

I've lent £12K to my brother, I'm expecting it back at some point but not currently holding my breath. He did agree £50 a month at one point (effectively paying almost nothing back) but even that never materialised so I've left it and reconciled myself to the loss.

I wouldn't normally do this but the circumstances warranted it at the time and the tables may be turned one day. Had to ask myself a few questions about what really matters at the time.

colsten

JohnRo wrote: »

I've lent £12K to my brother, I'm expecting it back at some point but not currently holding my breath. He did agree £50 a month at one point (effectively paying almost nothing back) but even that never materialised so I've left it and reconciled myself to the loss.

I wouldn't normally do this but the circumstances warranted it at the time and the tables may be turned one day. Had to ask myself a few questions about what really matters at the time.

I am not passing any judgement but it doesn't sound like saving or investing so really not a subject for this board. Perhaps the board guide can move it to a different board? Moral dilemmas, Arms, etc etc?

masonic

lalman wrote: »

What advice moving forward would you give?

Mine would be to set out rules from the get go, take emotion out of it and if none payment occurs have a clear explanation on what occurs if this is the case.

Treat the request for a loan as an intention to pay the money back, not an obligation. If getting the money back is more important than whatever it is they need it for then you probably need to come up with a very good reason why lending the money is the right thing to do.

Kendall80

The OP could set say a 10% rate. Which if i'm honest i'd probably do - They can take it or leave it.

Unless it was for my kids of course. 10% would be harsh. 8.5% would be much fairer.

CLAPTON

why ever do you lend to friends and family?

are you known to be seriously rich?

colsten

Kendall80 wrote: »

Unless it was for my kids of course. 10% would be harsh. 8.5% would be much fairer.

Your kids would hopefully be smart enough to tell you where to stick your 8.5% these days.

I still don't understand what this thread has to do with savings and investments.

lalman

Colsten it's near years eve eve... Chill out mate....

Kendall good to know haha - I agree it does depend on what they want the money for... That's if i am potentially going to write it off...

Clapton, not rich just someone who saves up (frugal) for what I want rather than getting loans etc

masonic

lalman wrote: »

Clapton, not rich just someone who saves up (frugal) for what I want rather than getting loans etc

Maybe you should do that a bit more discreetly.

colsten

lalman wrote: »

Colsten it's near years eve eve... Chill out mate....

I am very chilled but I am not your mate and I still don't understand what lending to family and friends has to do with savings and investments and why the time of year would make any difference.