Lending money to a friend

Gamora

Hi
I have been asked by my uncle to draw up an agreement for him as he wants to get a loan out to lend £3000 to a friend so the friend can buy a £5000 caravan. (The friend is putting up the other £2000). The friend will be paying the monthly installments to my uncle who will then pass this to the loan company to meet the monthly repayments. They have both agreed that should the friend miss one monthly payment then the caravan will be transferred into my uncles name for him to either keep or sell and they both want this putting in the agreement. I would like to know if this is legal/enforceable should a payment be missed and if the friend then decides not to keep to the agreement and not transfer the caravan to my uncle. I can foresee that this will be the case, especially if they have paid off the bulk of the loan before missing a payment. Any advice would be greatly appreciated as we have all advised our uncle not to do this but he really wants to help his friend.
Thanks in advance!

TonyMMM

It is a really stupid idea.

But if he is determined, then he should buy the caravan in his name and only transfer ownership to the friend when the last instalment is paid.

That would be a slightly less stupid way of doing it.

bellaboo86

If your uncle had far bit in savings and wanted to lend his friend 3k that would be one thing but to take out a loan shows he can't have much money himself. Utterly stupid idea.

CLAPTON

absolutely stupid idea

MABLE

Gamora wrote: »

Hi
I have been asked by my uncle to draw up an agreement for him as he wants to get a loan out to lend £3000 to a friend so the friend can buy a £5000 caravan. (The friend is putting up the other £2000). The friend will be paying the monthly installments to my uncle who will then pass this to the loan company to meet the monthly repayments. They have both agreed that should the friend miss one monthly payment then the caravan will be transferred into my uncles name for him to either keep or sell and they both want this putting in the agreement. I would like to know if this is legal/enforceable should a payment be missed and if the friend then decides not to keep to the agreement and not transfer the caravan to my uncle. I can foresee that this will be the case, especially if they have paid off the bulk of the loan before missing a payment. Any advice would be greatly appreciated as we have all advised our uncle not to do this but he really wants to help his friend.
Thanks in advance!

What a very silly idea. Even if it enforceable that friend will be a friend no longer if comes to legal action.

Also a true friend would not put someone in that position knowing the pitfalls that could arise through default.

Tell well meaning uncle to say no and the best suggestion is go to a bank or credit union who are set up for loaning money.

Apples2

Has anyone suggested this is a stupid idea?

dealer_wins

OP Dont do this, NO REALLY dont do this.

Its a really REALLY stupid idea, and sounds like its a scam rather than a favour that will go wrong!

MABLE

Apples2 wrote: »

Has anyone suggested this is a stupid idea?

What do you think? You decide!!

SailorSam

Don't do it.
I gave family money despite everyone telling me i shouldn't do it. It was a lot more than a few thousand pounds that i've lost, i almost lost my house. And all because while others were warning me i kept saying i trusted them 100%.
If i could only go back 9yrs.

iolanthe07

Your uncle should only do this if he is easily able and willing to stand the loss. There is a reason why his 'friend' can't get a loan in his/her own name. Think about it.

McKneff

What if the friend cant pay the instalment.
Yes, you say the caravan will be transferred over ot your uncle but what if £4K is owed on the loan and the caravan only attracts a sale of £2K....


Mad, utter madness.