Loan from a friend... contract question

thejoyofanonymity

Hiya
I'm having to buy a car (change of job, losing company car) on relatively short notice and need a car for the new job. I was offered a finance deal at a pretty hefty APR (49%) so a friend has very kindly offered to fund the money for a used car for me.

I know there are a million horror stories about lending money between friends so I want to make sure we do this right - I'm wanting a contract drawn up and very helpfully there's a great looking template on law depot which we're going to use. It was my idea to do the contract, I just want to make sure we're both protected and know exactly what's what.

My question is that my friend has said that if for any reason I default, he wants something in the agreement that states the vehicle goes to him which seems fair - and law depot has an area where I can specify that the loan is secured on the car, ownership transferring to me immediately but with a security interest on the vehicle until completion of the agreement.

It looks like the right wording to have, but I just want to make sure I'm setting up the right thing. Any advice from anyone here who's done this kind of thing before...?

Cheers everyone!

worried_jim

Give him a spare set of keys so when you stop paying him back he can drive away in his car.

Craig1981

many a friendship broken ans families broken when it comes to borrowing from them

is this the only option you have? you and your friend think this is something that worst case scenario, contract or not, will come between you in the future?

49% APR is high, is this the only quote you have got? this to me says says you have a poor history of credit and high risk. is your friend aware of this?

if you dont have a poor history, check some personal loans through places like rate setter, Zopa that offer soft searches before applying - you may get that APR down from 49%

BrassicWoman

Put the car in his name with you as registered keeper

glennstar

No good can come of this.

You sound like a bit of a risk (49% is high) and your collective naivety that some paperwork (template or no) is giving either of you any security is badly placed at best and will compound the disappointment of a default with the realisation that the remedy is not as advertised.

Avoid, avoid, avoid!

sourcrates

Hi,


It really dosen`t matter what is written into a contract, as contracts can be, and regularly are, broken.


It would still require him to take you to court and obtain a CCJ before any enforcement action can be taken, then there is the cost of enforcement, each stage will cost him more money, with no guarantee of getting anything back.


These kind of arrangements usually do turn sour, I would not get involved if it were me.

PasturesNew

Make sure you put an end date in, and other relevant dates.

Judge Rinder often holds these debt records and points out that while person A says they've borrowed... it doesn't mention the date by which it is to be paid back, making it all a bit "open ended" as to when the lender actually has cause to be disgruntled.

foxy-stoat

Well done for not taking out the Amigo loan and you have a good friend there.

I would draw up all the agreements you like but if you are in a position where you are unable to make the monthly payment then do your friend a favour and drive the car to his house and hand him the keys until you get upto date with the payments- keep it insured and VED'd.

Try and get the cheapest car you can find that looks like it will last as long as it takes to repay the loan.

roundbox

how much is the loan for?

buythedip

If you are desperate check out longer term car rentals. You can get a hatchback for less than £300 a month. I’ve done this in the past and it works really well. You’re in a much better spot this way if your cicimstances change again for the better or worse.

simonineaston

Simple answer: do not borrow desperate money from friends and family. End of. Its not just us being smart, it's simply 'cos the game isn't worth the candle. Here's another handy maxim: the road to hell is paved with good intentions...

I know there are a million horror stories about lending money between friends.

Guess why!