Personal Loan Between Friends/Employer

Peanutter1972

Hi All,

Let me start by apologising if this in an the wrong area, it is my very first post on MSE Forums.

This is on behalf of my Son. He was lent an amount of money by his current employer, and there was an agreement put in place signed by various parties (see bottom of post). This was for a car, however it is worded as a Personal Loan Agreement, and furthermore does not mention the employer status or anything on those lines.

Last week, the lender rang and said he wanted the money back now because "you have made changes to the car and it isn't even yours yet". He also asked that my son "Ask your parents or anybody else to give you the money to pay me back".

Now my son is in a state, because this has come from nowhere. He has paid back every month, on time, for 4 months and absolutely wants to continue to do so. Now he feels pressured at his work, and does not know where to turn or what to do next.

Can someone look over the agreement and tell me if this guy has any standing should he continue to push..

Thank you in advance for any help from the community.

PERSONAL LOAN AGREEMENT

This loan agreement is made and will be effecdtive on 30/06/2016

Between

Sons Name referred to as the borrower with a street address of Sons Address

And

Employers/Friends Name referred to as the Lender with a street address of Employers/Friends Address

Terms and Conditions

Promise to Pay;
Within 30 months from the above date, borrower Sons Name promises to pay the lender Employers/Friends Name £4500.00 plus interest.

Liability - Although this agreement may be signed below by more than one person, each of the undersigned understands that they each as individuals responsible and jointly and severally liable for paying back the full amount.

Details of the loan between the borrower Sons Name and lender Employers/Friends Name:-

• Amount of loan £4500.00
• Amount Financed £4500.00
• Finance Charged £1500.00
• Total Payment £6000.00
  30 monthly payments £200

Repayment of Loan
Borrower Sons Name will pay back in the following manner: Sons Name will repay the amount of this in 30 equal continuous monthly instalments of £200.00 each on the 30th day of each month preliminary on the 30 day of March 2016 and ending 30th July 2018.

Borrower Sons Name has the right to pay back the whole exceptional amount at any time. If borrower pays before time, or if this loan is refinanced or replaced by a new note, lender Employers/Friends Name will refund the unearned finance charge, figured by rule 78-a commonly used formula for figuring rebates on instalment loans.

Late Charges
Any payment not renumerated within ten (10) days of its due date shall be subject to a belatedly charge of 5% of the payment, not to exceed £30.00 for any such late instalment.

Failure to Pay
If for any reason borrower Sons Name not succeeds to make payment on time, borrower shall be in default. The lender Employers/Friends Name can then order instant payment of the entire remaining unpaid balance of this loan, without giving any further notices. If borrower Sons Name has not paid the full amount of the loan when the final payment is due, the lender Employers/Friends Name will charge the borrower interest on the unpaid balance.

Collection Fees
If this notice is placed with a legal representative for collection, the the borrower Sons Name agrees to pay an attorneys fee of fifteen (15%) of the balance. The fee will be added to the unpaid balance of the loan.

Co-Borrowers
Any Co-borrowers signing this agreement agree to be likewise accountable with the borrower of this loan.
Borrower Sons Name and lender Employers/Friends Name both agree to follow above mentioned terms & conditions.

PeacefulWaters

I'm assuming employer/friend/lender is one and the same.

The agreement itself makes no reference to being for a specific car. Neither does it make reference to being able to call the debt in early for any reason.

On that basis it is highly unlikely that there is a court in the land that would support the lender's demand for repayment.

Of course, this implies financial difficulties for the employer who may need to save money on his workforce and could start making life difficult for certain employees.

I'd be tempted to seek out an opportunity to reimburse £4,500 minus payments already made in full and final settlement if the funds can be found. The interest charge (with no stated APR) isn't generous and the lender might bite your hands off.

Technically it's not even an enforceable credit agreement and I doubt the lender has a Consumer Credit Licence. If it wasn't the employer there'd be a temptation to tell them where to stick their loan agreement and future repayments.

dealer_wins

Couple of observations.

Loan agreement dated 30/06/16 and made 4 monthly repayments?

No APR quoted?

Not enforceable whatsoever IMO.

jonesMUFCforever

Whilst the agreement does not seem legit I have a suspicion that the employee could find his employment terminated if the loan is not repaid.
It could be that the employer's acountant has found something amiss and this is the reason they want the money back pronto.

bris

https://www.gov.uk/expenses-and-benefits-loans-provided-to-employees/overview


The loan is legal but the T&C's are questionable. Has HMRC been informed?

Peanutter1972

dealer_wins wrote: »

Couple of observations.

Loan agreement dated 30/06/16 and made 4 monthly repayments?

No APR quoted?

Not enforceable whatsoever IMO.

Apologies, the date should have been 30/03/2016.

Peanutter1972

I advised my son to get in touch with his employer and say that he is not willing to ask for funds from other people, and that he wishes to continue to repay as agreed.

Response was "I want the car sold by next week and the money back".

Unfortunately it seems the posters who said employment may become an issue are spot on. So the question is, what is the best course of action for my son?

marcarm

Peanutter1972 wrote: »

I advised my son to get in touch with his employer and say that he is not willing to ask for funds from other people, and that he wishes to continue to repay as agreed.

Response was "I want the car sold by next week and the money back".

Unfortunately it seems the posters who said employment may become an issue are spot on. So the question is, what is the best course of action for my son?

To start looking for another job it would appear.

Assume there is no one else in the business higher up that he can speak to?

Seems like there may be a cash issue at the business so either way it looks as though your son may not be working there for much longer. Shocking way to treat someone.

PeacefulWaters

bris wrote: »

Has HMRC been informed?

Why would they need to be?

[Deleted User]

Firstly, the agreement states quite clearly, that it is a "Personal Loan", so the car does belong to your son.

Secondly, who are the various people, who are "responsible and jointly and severally liable for paying back the full amount"?

Next, how long has your son worked for the company?

BTW: I agree with PeacefulWaters. Assuming the employer hasn't got a Consumer Credit Licence, it's highly unlikely the agreement is enforceable.

theblagger

Highly unenforceable if no credit licence , and I think your son should start looking for alternative employment now/Asap as it seems the employer has cash flow problems, may be worried that the loan will not be paid back in lieu of salary/wages....?