Family loan

Robbie4321

Going to loan my son £10,000 do I need to get loan agreement, any advice, and if so any templates on this site?

dresdendave

Usual advice would be don't do it, family and finances are not a good mix.

If you want to go ahead, give him the money on the understanding that it would be nice if he repaid you at some point but if he doesn't it's no big deal.

If you're not happy to do that and he fails to repay, all the bits of paper you mention will not get you the money back but merely leave your relationship in tatters.

enthusiasticsaver

Usually the advice is don't lend anything you cannot afford. If you are that concerned you need a loan agreement then probably best not do it. It won't be enforceable unless you take him to court and doubtful if it will make him pay. What is the £10k for?

T-G-C

You need to consider the following before lending this amount:

- Is the borrowed amount affordable for the person in question? You cannot conduct a credit check for non-commercial lending, however it would be useful to understand their financial circumstances before agreeing. Depending on the loan purpose, the borrower could be in financial strain for needing to borrow this amount in the first place.

- Is the borrowed amount suitable for the person lending it? You should not lend cash when under financial strain, as this can lead to a reduction in your savings, assuming this is where the funds are coming from and could therefore end up in a bad situation yourself.

- Is the loan amount, agreed term and monthly repayment amount documented in writing? If you are charging interest on the loan, have you documented the exact total amount on top of the cash sum? You should ensure the document is signed by the lender (yourself) and the borrower (your son).

As others have hinted, lending to family and friends can sometimes result in disaster. You can find templates on the internet, however since it isn't a debt regulated under the Consumer Credit Act, it doesn't have to be more than a piece of paper detailing the info I specified above and both your signatures. For even more consistency, tell them to write a signed statement on the bottom confirming they are receiving the loan sum and agree to the terms outlined above (repayments, interest etc.)

If your son decides to disregard the debt and you have a strong contractual agreement with them, you can attempt to enforce it through a small claims court or TV equivalent such as Judge Rinder.