Lending money to family member

Pollycat

Mimi_Arc_en_ciel wrote: »

I put that at the bottom

I read the last sentence in your earlier post (below) as 'gifting outright' i.e. saying 'here, you can have this money' instead of saying, 'yes, I'll loan you £xx and expect you to pay it back at £x per month on this date' but thinking inside 'I hope they do pay it back but I'm not going to be gutted/suicidal/murderous if they don't'.

Mimi_Arc_en_ciel wrote: »

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

spend_or_save

Trek_girl wrote: »

So you acknowledge that a contract does not stop them from not paying. I have never said having a contract in place gaurantees payment 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. stating the obvious but dont disagree

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. - Again have never stated its exactly the same, and would also think there has probably been a few awakward xmas dinners etc with family members who have refused to help out others when they were in a position to do so.

I did not say never lend. I said lending has many pitfalls and is best avoided. You said a contract offers protection. yes protection from the awkward xmas dinners you point out above, as, if its done correctly, it will detail what happens in certain circumstances, that means a few missed payments caused by a job loss will not cause any awkwardness (for the person who took loan) or bitterness (for the person who gave the loan) because the process for dealing with this will have been agreed in the contract. - My point is that a contract only allows you to take legal action if they fail to pay. - Dont think anyone has ever questioned this

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. - again who has said otherwise? as above the basis of the loan should be agreed by both parties and should contain provisions for what happens in certain circumstances that is likely to affect the person taking the loan's financial position

A contract does not stop the damage to relationships (laid out extensively above and in many threads on this forum). as above, if its detailed correctly it can greatly reduce this happening

A contract does not even guarantee you will get your money back. again i dont think anyone has disputed this

I have added some responses in above, TBH im not really sure what the point of your argument is, you seem to arguing with me that a loan is risky and there is no gaurantee of getting your money back, which is slightly odd as i have never said otherwise, and in fact im pretty sure my first sentence in this thread said pretty much that.

Trek_girl

Spend or Save - to put it very simply
1. I, together with the majority of posters advised the OP not to go ahead with the loan.
a. Main reason being the emotional/relationship consequences if repayment is not made.
2. You responded ‘get a contract’
3. I pointed out that a contract will not protect you from the emotional impact or even get your money back
4. You responded saying, well banks still give out loans after people default.

I don’t know what more I can say.

JasX

Trek_girl wrote: »

I don’t know what more I can say.

Yeah, I think that Spend or Save's view that you can generally avoid any emotional fallout if your contract is very detailed made me lol :j

spend_or_save

Trek_girl wrote: »

Spend or Save - to put it very simply
1. I, together with the majority of posters advised the OP not to go ahead with the loan.
a. Main reason being the emotional/relationship consequences if repayment is not made.
2. You responded ‘get a contract’
3. I pointed out that a contract will not protect you from the emotional impact or even get your money back
4. You responded saying, well banks still give out loans after people default.

I don’t know what more I can say.

Trek Girl,

Don't let the facts get in the way of your response, the OP asked for a template for a contract to clearly set the boundaries/penalties etc

Your response is don’t give a loan because your not guaranteed to get it back and Christmas dinner might be awkward.

Maybe im just not as patronising as some, but i figured the OP would have known already that there is a risk of non payment, and was merely pointing out,from experience, that if a contract is drawn up and clearly states the terms and conditions and what happens in certain circumstances then, the risk of not recovering your money and/or awkward relationships with your family can begreatly reduced.

i don’t know what more i can say.

JasX

spend_or_save wrote: »

if a contract is drawn up and clearly states the terms and conditions and what happens in certain circumstances then, the risk of not recovering your money and/or awkward relationships with your family can begreatly reduced.

Which part of cloud cuckoo land do you live in?

I'm sure those christmas dinners where 'massively out of pocket' stepparent rene and 'irresponsible, destitute spendthrift' little stepdaughter Elsa will be perfectly jolly because the broken contract grating at them both was very very detailed so neither of them minded a bit

HappyMJ

The only person I'd lend money to is my mother as I don't care whether I get it back or not. I wouldn't take her to court and I'd still turn up at Christmas give her a kiss and a Christmas present with no bad feelings. I don't need a contract for that. She pays or she doesn't....so what. Stepdaughter though no...even my own daughter probably not. I would as I said earlier buy the car in my own name and effectively rent it to her with ownership passing to her on repayment of the loan. Insurance will cover loss or damage. I'm sure it's possible to get insurance to ensure the owner of the car is paid out if the named driver writes the car off?

spend_or_save

JasX wrote: »

Which part of cloud cuckoo land do you live in?

I'm sure those christmas dinners where 'massively out of pocket' stepparent rene and 'irresponsible, destitute spendthrift' little stepdaughter Elsa will be perfectly jolly because the broken contract grating at them both was very very detailed so neither of them minded a bit

You obviously have your opinion that no one should ever lend anyone any money, thats fine, bit strange to me but entilted to your opinion.

Cant really understand your smart @rse comments disputing that a detailed contract will help minimise the risk of arguments when it comes to a loan though, seems a pretty simplistic fact that the more detailed the contract, the more everyone knows where they stand and less room it leaves for misunderstanding and arguments.

The OP asked for information on how to construct the loan, he never asked for people to come back with stories (mostly not even from personal experiance) of how they just shouldnt do it.

I have only tried to point out the more detailed the better, and if its stated what happens when a job is lost, car is damaged, payment missed, etc then the easier it can be.

MothballsWallet

VfM4meplse wrote: »

I bet this has soured your relationship with the aforementioned. That's why you shouldn't lend unless you're prepared to ditch any illusion that you'll see the money again.

Correct - I refuse to speak to him.

He was also a drinker at the time thanks to a relationship break up.

Trek_girl

spend_or_save wrote: »

.

The OP asked for information on how to construct the loan, he never asked for people to come back with stories (mostly not even from personal experiance) of how they just shouldnt do it.
.

If someone came on here saying they wanted to jump off the roof of their house into a paddling pool and wanted to know what kind of paddling pool to use, we would all say 'don't jump!'. We have seen people do it on TV- dive into a pool and walk away without a scratch, but common sense and perhaps past experience says it will end in tears.

You are advising on what kind of paddling pool (contract) he should use.