Personal Loan Between Friends/Employer

DCFC79

As been suggested its a good idea if your son found another employer but agree with the current one a payment plan to pay the loan off.

glentoran99

DCFC79 wrote: »

Would be a good idea if your son found another employer but agree with the current one a payment plan to pay the loan off.

He doesn't need to agree a payment plan, he has one £200 a month, the employer is attempting to call in the whole debt

[Deleted User]

DCFC79 wrote: »

Would be a good idea if your son found another employer but agree with the current one a payment plan to pay the loan off.

They've already got a payment plan.

£200 per month, for 30 months.

[Deleted User]

glentoran99 wrote: »

the employer is attempting to call in the whole debt

Which, even if the agreement is enforceable (which is questionable), he has no power to do.

antrobus

theblagger wrote: »

Highly unenforceable if no credit licence ....

The employer might argue that no CC licence is required because "the provision of loans is a one-off or infrequent event". But the employer would still have to comply with CCA in terms of the form and content of the loan agreement, as well as basic contract law. After all, you can't unilaterally cancel a contract.

http://www.macfarlanes.com/media/1731/loans-to-employees-consumer-credit-act-implications-ric-march-12.pdf

theblagger wrote: »

.., 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....?

Most certainly.

And if son has two years + employment, consider legal action for constructive dismissal.

DCFC79

Bedsit_Bob wrote: »

They've already got a payment plan.

£200 per month, for 30 months.

glentoran99 wrote: »

He doesn't need to agree a payment plan, he has one £200 a month, the employer is attempting to call in the whole debt

I saw that, I meant to say stick to the agreenest.

[Deleted User]

antrobus wrote: »

The employer might argue that no CC licence is required because "the provision of loans is a one-off or infrequent event". But the employer would still have to comply with CCA in terms of the form and content of the loan agreement, as well as basic contract law. After all, you can't unilaterally cancel a contract.

http://www.macfarlanes.com/media/1731/loans-to-employees-consumer-credit-act-implications-ric-march-12.pdf

A couple of interesting points from that document.

Low_interest_rate_agreements wrote:

There will usually be an exemption where a loan is offered interest free (or with interest at a rate which is no more than 1 per cent above the base rate of certain major banks) to employees by their employer as an incident of their employment.

The loan the OP has been given, has an APR of 23.6%

I wonder how that compares to "no more than 1 per cent above the base rate of certain major banks"?

Low_interest_rate_agreements wrote:

In order to be eligible for this exemption, the loan cannot have restrictions placed on the use to which the funds provided under it can be put. In short, if the loan must be used for a specific purpose this exemption is unlikely to apply.

So the insistence, by the employer, that the loan was for a car, is not allowed.

bris

PeacefulWaters wrote: »

Why would they need to be?

Because although the APR is not shown on the loan it's around an eye watering 25%.
HMRC need to be informed if an employer charges more than their average official rate which is just 3% for 2015-2016.

Peanutter1972

OK, so next instalment is that my son has contacted him and said that he is not going to sell the car, but fully intends to stick to the agreement. He has now been summoned to the guys house at 7am tomorrow.

I guess that could be the time to see how far this 'man?' wants to go with his current course of action.


Also, question: Seeing as this "Agreement" at no point mentions the business or the fact that he is the employer, does the employer/employee relationship even come in to the "Agreement"? Is it simply a person to person loan?

Arleen

But this isn't strictly an employee loan, this is just guy A lending money to guy B and contracts make no mention of business anywhere. So from contract point of view that bit is meaningless, as all it is a contract between two private parties.
Even if the case were to go to court and judge would found the contract invalid for whatever reason, what do you think the judgement will be? It will not be "oh, your son can keep all the money", but instead it will be against the son to repay the remaining principle of the loan (without the interest, but remember that this is for the unlikely case where judge finds the contract to be null and void).

As contract goes its straightforward and to the point, outlining the sum, payment plan. Payment plan is clear that he is to pay 200 a month, and there is no provision for the lender to be able to "call" for the rest of the money at any point. So while he can ask for it, he has no legal leg to stand as long as your son will keep with the payments. And I mean to a day, as single late payments here will default the loan, and then he will have to pay it in full.

Now if your son thinks that he will get fired over not bending in to his sudden demand ask him to think whether he actually wants to continue working with someone who goes back on, not only his word, but a signed contract like that. The answer should be "NO" and he needs to start looking for a new job ASAP.

UPDATE: absolutely don't go to someones like that house at 7am, especially alone. Someone who makes snap decisions like that is, well, someone I wouldn't visit at his home alone.