Lending money to family member

countrybelle

Hi all, I would like to lend some money to a family member but wish to have an official legal agreement. Does anyone have a link to a good template? I searched online but am not confident with the results. I feel it's very important to have clear boundaries with the penalties outlined if there is a default. I appreciate your advice and comments. Thank you.

worried_jim

For penalties are you thinking small claims court? This is likely to end in tears so please be careful.

countrybelle

Hi
For penalties more like miss two payments and the item the loan is secured on comes to me.
Thanks

terryw

Penalties are generally unenforceable in English law.

You need a solicitor on this one .

Grumpelstiltskin

reneobscene wrote: »

Hi
For penalties more like miss two payments and the item the loan is secured on comes to me.
Thanks

And how would you enforce that if they refused to hand it over?


Send the boys round?

Jagraf

Personally I am only happy lending money if I assume I won't see it again, although I will lend it if I can.

If its a family member is there any way you can lend a little at a time?

DKLS

To be honest unless its a gift I wouldn't bother giving a penny. If its a loan it could and most likely will lead to difficulties regardless of any legal agreement.

Pollycat

DKLS wrote: »

To be honest unless its a gift I wouldn't bother giving a penny. If its a loan it could and most likely will lead to difficulties regardless of any legal agreement.

Not always though.

I've loaned a significant amount of money - in separate lumps - to a very close family member and she's hit every payment so far and I have no doubt that she will continue to do so until it's all paid off unless her financial situation gets worse.

So as Jagraf says, if she can't repay it all sometime further down the line, I'll write it off.

I'd never lend money I couldn't afford to lose.

enthusiasticsaver

Lending money to friends or family is never a good idea unless you are happy with never seeing it again. How would you enforce a legal agreement, even supposing you drew one up? Take them to court if they defaulted. That could lead to all sorts of family friction and could be expensive.


I have gifted money to my daughters to help make their life a bit easier and would rather do that than loan it but then I could afford to do it. Much depends on the relationship between lender and borrower, the financial position of both and what the loan is actually for.

Petra_70

Google 'never borrow money from friends'

https://www.google.co.uk/webhp?sourceid=chrome-instant&ion=1&espv=2&ie=UTF-8#q=never+borrow+money+from+family+or+friends

And then read this

http://www.moneycrashers.com/why-you-should-not-lend-money-to-friends-and-family/

And then decide if you still want to do it.

It's not a good idea at all to lend money to family or friends - ever. Unless (as people have said,) you can comfortably afford to lose the money.

Do so at your peril, but if you do, I fear we shall see you on these boards in a few months, saying 'Please help, I lent my family member 'xxx amount' and am struggling to get any of the money back. He spends 100s on other stuff though. What can I do? Where do I stand legally?' And so on.

Your legal document will only prove it was a loan and not a gift; it will be quite hard to get the money back. Even if you do go to a small claims court, it will cost time and money, and will cause resentment and bad feeling amongst the family. In addition, you may only get an order for a fiver a week to be paid back, if your family member can 'prove' he isn't very well off financially.

I repeat; only lend out what you can comfortably afford to lose.

HappyMJ

I would buy the "secured item" in your name and rent the "secured item" to your family member and if they refuse to make payments just get the item back.