Lending money to family member

Kynthia

Is she able to get a 0% credit card and buy the car herself? Or can she not save enough for an inexpensive secondhand car?

spend_or_save

Im suprised at all the negative comments, i agree giving a loan is a risk for anybody, banks, people whoever, so you do have to be prepared should anything go wrong, but you seem to be minimising the issues of this by getting a contract in place.

when i was younger, my father loaned me £10K so i could buy another flat without selling the one i lived in, we drew up a contract with the payment terms and interest rates and i never missed one payment. I would rather have missed a mortgage payment than a payment due to my dad after him going out his way to help me, so im a bit suprised others wouldnt feel the same when it comes to repaying

countrybelle

It's a shame that this enquiry was used to be unkind by some. Lots of cynics.

VfM4meplse

reneobscene wrote: »

It's a shame that this enquiry was used to be unkind by some. Lots of cynics.

Welcome to MSE!

This happens more often than not on this board, but pales into insignificance compared to DT. There seems to be a natural suspicion of all by some. I speak my mind and like to share my life experience, and so do others....its just that we are all shaped by our own varied histories, and some have been stung and expect the worse.

I would not wish to be unkind to you, or anyone else. But I stand by my view that if the decison to gift without strings is so difficult, you shouldn't lend at all.

Trek_girl

spend_or_save wrote: »

Im suprised at all the negative comments, i agree giving a loan is a risk for anybody, banks, people whoever, so you do have to be prepared should anything go wrong, but you seem to be minimising the issues of this by getting a contract in place.

when i was younger, my father loaned me £10K so i could buy another flat without selling the one i lived in, we drew up a contract with the payment terms and interest rates and i never missed one payment. I would rather have missed a mortgage payment than a payment due to my dad after him going out his way to help me, so im a bit suprised others wouldnt feel the same when it comes to repaying

Good for you that it all turned out so well for you. The problem is that sometimes things go wrong and you end up with a situation that is very emotional and stressful and time and time again people have seen family relationships damaged or ended due to money.

There are so many what ifs.
What if she crashed it and it was written off on the first day/ month/year - would she really continue to pay for a car she was not getting the use of?
Made redundant?
Diagnosed with an illness?
Have her bank account emptied by a boyfriend ?
OP and the borrower's mum separate on bad terms?

Hundreds of scenarios. This is the reason that you should not lend money to family you can not afford to give away. Even if you can cope financially, not getting the money back would leave a sour taste in your mouth.

Of course you expect that your situation will end well, but so did all the people filling up the small claims court.

spend_or_save

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Trek_girl wrote: »

Good for you that it all turned out so well for you. It turned out the way the contarct stated it would The problem is that sometimes things go wrong and you end up with a situation that is very emotional and stressful and time and time again people have seen family relationships damaged or ended due to money. - If the contract is set up correctly it minimises the risk of this, and you would have to ask yourself how much of a relationship you would want with a family member who would be willing to break and agreement and in essence steal money from you

There are so many what ifs.
What if she crashed it and it was written off on the first day/ month/year - would she really continue to pay for a car she was not getting the use of? - yes just like you would if you had borrowed from a bank
Made redundant? - Contract should cover this
Diagnosed with an illness? - Contract should cover this
Have her bank account emptied by a boyfriend ? - Call the Police
OP and the borrower's mum separate on bad terms? - Borrower should honour the agreement.

Hundreds of scenarios. This is the reason that you should not lend money to family you can not afford to give away. Even if you can cope financially, not getting the money back would leave a sour taste in your mouth.

Of course you expect that your situation will end well, but so did all the people filling up the small claims court.

See above, for response to what if's,

The OP seems to be aware things can go wrong, hence why they want to know what to put in a contract to cover this eventuality.

Trek_girl

spend_or_save wrote: »

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See above, for response to what if's,

The OP seems to be aware things can go wrong, hence why they want to know what to put in a contract to cover this eventuality.

A contract is not magic. We all have contracts to pay our mortgages and rents, but guess what ? Every day, hundreds, if not thousands default.

Petra_70

reneobscene wrote: »

It's a shame that this enquiry was used to be unkind by some. Lots of cynics.

Point out who was unkind.

HappyMJ

spend_or_save wrote: »

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See above, for response to what if's,

The OP seems to be aware things can go wrong, hence why they want to know what to put in a contract to cover this eventuality.

Unfortunately real life doesn't work like that.

I've not paid debts myself in the past. I've broken the contract. What happens? Nothing. The creditor gets nothing and that's it. You might be able to enforce your contract in court but if the person you are taking to court has nothing you get nothing and you've wasted more money taking them to court.

LilElvis

reneobscene wrote: »

It's a shame that this enquiry was used to be unkind by some. Lots of cynics.

No, lots of realists.

If you thought that your partner's daughter was 100% guaranteed to repay you faithfully then surely her word would be good enough?

As you have posted here, asking for advice re a cast-iron contract, then it would seem that you are as much of a cynic/realist as the majority of us.