Lending money to family member

Spirit_2

The best advice on here has been to consider it a gift.... I would add " if there are Trust issues". We have often loaned money to family and friends with mixed results. Only common feature is that not paying back or taking way too long to pay back, leaves a nasty taste and the memory lingers.

a few examples
loan to nephew to help with mortgage, over 15 years ago, paid back less than half, lied to their parents to tell them it was cleared, avoided us for about 10 years, ignored direct requests to make repayments. Has divorced/remarried and has compltely put this out of his mind.

loan to nephew for portion of house deposit..judged that repaying it was going to be too much so made a gift of 50% and loaned the rest over X years, repaying by standing order. All OK but felt bl**dy annoyed when 6 months later they had a winter two week sun holiday with the kids, felt as if we had paid for their holiday. ( Iwould not have done, we had previously paid for a summer holiday for them and in the year of the house purchase a family friend loaned them a villa in the school hols).

DD's car was unreliable and we live in a rural area. We wanted her to have a better car. Gifted 50% loaned her 50%.paid back just fine.

would not lend (or gift)to the first two again.

have gifted a house deposit to DD there is no way she could make repayments as well as pay a mortgage. She has has asked us to hang on to funds until she is ready to buy, as she is concerned she may be tempted to spend some!

Had a long weekend away with a friend, at the end of which he asked OH to settle his hotel bill, inferring he would repay on return to UK. Not a huge sum, but it took untill he wanted us to pay something else on his behalf for him to remember and repay us in full.

I suppose what I am saying is when you gift/loan money in the family you perhaps take too great an interest in how they spend their money and there is an emotional impact if you feel cheated.

spend_or_save

Trek_girl wrote: »

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.

and guess what? Every day banks give out more mortgages.

You cant say no person should ever give a family member a loan because some people dont pay it back, its like saying santander/rbs etc should never give out a mortgage again after one person defaults!!

Laconic

[QUOTE=Spirit;69375039
I suppose what I am saying is when you gift/loan money in the family you perhaps take too great an interest in how they spend their money and there is an emotional impact if you feel cheated.[/QUOTE]

This above is so true. For that reason alone, reconsider the loan. It changes your relationship and not for the better -- you start taking an unhealthy interest in the affairs of another adult. Given that this is a step-child, that's a potential strain in your relationship none of you need. I'd either gift as much money as I'm comfortable parting with (if it doesn't quite reach a new car, then she can top it up) or else lend the money to my partner for him to sort it out with her.

Pollycat

Laconic wrote: »

This above is so true. For that reason alone, reconsider the loan. It changes your relationship and not for the better -- you start taking an unhealthy interest in the affairs of another adult. Given that this is a step-child, that's a potential strain in your relationship none of you need. I'd either gift as much money as I'm comfortable parting with (if it doesn't quite reach a new car, then she can top it up) or else lend the money to my partner for him to sort it out with her.

Not always.

I've posted several times on this thread about a couple of loans I've made to a close family member - running concurrently - and it's not changed my relationship with her at all.
The 2 direct debits go into my current account each month and as long as that happens what she does with the rest of her money is her own business.
Having said that, I'm well aware that her financial situation may worsen and she may at some point in the future be unable to finish repaying the loans.
I have no doubt that she will make every effort to repay in full - even to the extent of doing without essentials for herself which I would absolutely not countenance - but I am prepared to write any oustanding amount off and I can afford to do that.

Maybe it's different in that she's my closest relative and any money left over when I die would go to her anyway, so perhaps it's just an 'early inheritance'.

I wonder if the OP thinks his partner's daughter may not repay because she doesn't currently manage money well:

reneobscene wrote: »

I'd just like her to understand it is a serious matter and that she has to budget and understand how to manage her finances. It will help her in the future to be responsible now.

JasX

reneobscene wrote: »

I have thought about keeping it in my name but as it states on the v5 it doesn't mean I own it. I will keep a key though, just in case.

No people talking about having the car in your own name generally were talking about you buying the car yourself OWNING the car not 'just acting as registered keeper' (ie you bought the car and have all the official sale paperwork in your name)

basically to prevent you ending up out of pocket when she runs off with the car and claims you forged her signature on your mickey mouse home made agreement

but yeah you seem intent on ignoring all advice given so will have nobody but yourself to blame when it all goes south, you end up with no money, no claim on the car and a wrecked relationship with both partner and their daughter as a direct result

Please post to let us all know when this happens so we can use it to warn the next person

Trek_girl

spend_or_save wrote: »

and guess what? Every day banks give out more mortgages.

You cant say no person should ever give a family member a loan because some people dont pay it back, its like saying santander/rbs etc should never give out a mortgage again after one person defaults!!

So you acknowledge that a contract does not stop them from not paying. Banks are a commercial enterprise. They have very clever people who calculate how much they can afford to lose and how to pass the costs on to others, how to adjust interest rates on loans etc. They lend money because that is how they make money and so naturally continue to lend even when clients default.

There is no emotion felt when a bank sees someone has not paid. There are no awkward Christmas dinners, people not being invited to weddings, shouting, stress, feelings of betrayal, disappointment, guilt etc.

I did not say never lend. I said lending has many pitfalls and is best avoided. You said a contract offers protection. My point is that a contract only allows you to take legal action if they fail to pay.

A contract will not prevent them for failing to pay for any of the hundreds of reasons (legitimate or otherwise) that have caused people to fail to pay back loans to relatives for the whole of recorded history.

A contract does not stop the damage to relationships (laid out extensively above and in many threads on this forum).

A contract does not even guarantee you will get your money back.

JasX

Trek_girl wrote: »

A contract does not even guarantee you will get your money back.

Purchasing and owning the car themselves initially would at least allow them to take/keep the car if it all goes south and sell it to get something back fairly easily

But the OP won't even take that advice.

In which case after the relationship breaks down partners daughter will almost certainly get to retain it and police etc will treat it as a civil matter for OP to try and resolve themselves via the courts whilst letting partners daughter keep the car

Mimi_Arc_en_ciel

I haven't read all the replies (Quick lunch break)

But - From experience - DON'T DO THIS

I borrowed my brother money, and he paid back, then the next time he asked for more, and he paid back. Final time he asked for a few hundred... then disappeared on me. Managed to get "most" of it back but had to involve my parents (they were the only ones who could contact him) and now, all I get when I ask if hes going to finish paying me back is "I'll sort it"

Had a similar thing a few years ago with a friend too - who was more like a sister to me, we booked to go away for the weekend and she was £70 short so I lent it her. on the last day she went home early (Said there was an emergency at home) then I never saw her, or my £70 again!

I'll never, EVER, lend anyone money again.


Unless you can afford to "gift" it them, I.e - keep it and not pay it back, I wouldn't bother at all

Pollycat

Mimi_Arc_en_ciel wrote: »

But - From experience - DON'T DO THIS

I'd amend the above to
DON'T DO THIS UNLESS YOU CAN AFFORD TO WRITE THE LOAN OFF IF THE WORST HAPPENS.

Mimi_Arc_en_ciel

Pollycat wrote: »

I'd amend the above to
DON'T DO THIS UNLESS YOU CAN AFFORD TO WRITE THE LOAN OFF IF THE WORST HAPPENS.

I put that at the bottom