settling loan in Foreign currency

notforsale

Thank you for all your responses. This was a student loan and I borrowed it over 6 year period for my higher studies. This was actually my uncle from who I borrowed this money from. Initially when I borrowed the money, my uncle said he did not want the money back. But I voluntarily agreed to pay him back and promised to return everything I have borrowed over the six years. Every six months, I have sent in a letter to them requesting the amount of money in pounds but then they never discussed anything about paying back in Swiss franc. I have not gone on holidays or anywhere but I saved all I earned and paid them 8000 pounds a year and finished my loan in 5 years. Please advise

DrEskimo

notforsale wrote: »

Initially when I borrowed the money, my uncle said he did not want the money back.

He's certainly changed his tuned since then....!

notforsale wrote: »

Every six months, I have sent in a letter to them requesting the amount of money in pounds but then they never discussed anything about paying back in Swiss franc.

So to clarify, they lent you £40,000 in 2004, which cost them 84,000CHF.
How have they been calculating the amount you owe them every 6-months?
That bit is crucial.

If they simply divided the £40,000 into 30 payments (every 6-months over 15-years), then yes, they have lost out. You would have been paying back £1,333, which is worth about 3,000CHF in 2004, but the same £1,333 payment in 2019 would have been only worth about 1,700CHF.

What they should have done is calculate it based on CHF, then the amount of GBP needed to meet that CHF payment every 6-months would have automatically adjusted for the exchange rate. That would be 30 payments of 2,800CHF. In 2004 this would have cost you £1,233 to send, however in 2019 sending the same 2,800CHF payment would have cost you £2,153 to send.

Probably easier to demonstrate using the table you provided...

Here is the scenario where you pay him fixed payments based on GBP:

2004 2.275563 £2,500.00 CHF 5,688.91
2005 2.262491 £2,500.00 CHF 5,656.23
2006 2.307692 £2,500.00 CHF 5,769.23
2007 2.401762 £2,500.00 CHF 6,004.41
2008 2.000966 £2,500.00 CHF 5,002.42
2009 1.694605 £2,500.00 CHF 4,236.51
2010 1.610585 £2,500.00 CHF 4,026.46
2011 1.421876 £2,500.00 CHF 3,554.69
2012 1.486504 £2,500.00 CHF 3,716.26
2013 1.449511 £2,500.00 CHF 3,623.78
2014 1.506557 £2,500.00 CHF 3,766.39
2015 1.469968 £2,500.00 CHF 3,674.92
2016 1.335299 £2,500.00 CHF 3,338.25
2017 1.268122 £2,500.00 CHF 3,170.31
2018 1.305428 £2,500.00 CHF 3,263.57
2019 1.303562 £2,500.00 CHF 3,258.91

£40,000.00 CHF 67,751.23

Here is the scenario where you pay him fixed payments based on CHF:

2004 2.275563 £2,307.12 CHF 5,250.00
2005 2.262491 £2,320.45 CHF 5,250.00
2006 2.307692 £2,275.00 CHF 5,250.00
2007 2.401762 £2,185.90 CHF 5,250.00
2008 2.000966 £2,623.73 CHF 5,250.00
2009 1.694605 £3,098.07 CHF 5,250.00
2010 1.610585 £3,259.69 CHF 5,250.00
2011 1.421876 £3,692.31 CHF 5,250.00
2012 1.486504 £3,531.78 CHF 5,250.00
2013 1.449511 £3,621.91 CHF 5,250.00
2014 1.506557 £3,484.77 CHF 5,250.00
2015 1.469968 £3,571.51 CHF 5,250.00
2016 1.335299 £3,931.70 CHF 5,250.00
2017 1.268122 £4,139.98 CHF 5,250.00
2018 1.305428 £4,021.67 CHF 5,250.00
2019 1.303562 £4,027.43 CHF 5,250.00

£52,093.00 CHF 84,000.00

Socajam

Bermonia wrote: »

Seriously Socajam? Hey perhaps you’re right, perhaps his friend WAS being selfish lending him such a large amount of their money with no fees or interest, despite being deprived of those funds to earn any interest from... OP try being as half a decent friend to him and pay up what’s owed, or spend loads on legal costs and fees and then pay up

You are bad as the idiot uncle, but that's another thread.
The uncle had all these years to inform the OP of the fluctuations in currency and that he will be coming up short when the OP eventually repays the loan. But to drop something like this on the OP after al these years does not say much about the uncle.
As the OP said the uncle never wanted any interest on the money, so why now is he switching and asking for the equivalent. He is lucky that OP repaid him.
If I was the OP I would give him 10,000 as a goodwill gesture and move on.

Kentish_Dave

notforsale wrote: »

Thank you for all your responses. This was a student loan and I borrowed it over 6 year period for my higher studies. This was actually my uncle from who I borrowed this money from. Initially when I borrowed the money, my uncle said he did not want the money back. But I voluntarily agreed to pay him back and promised to return everything I have borrowed over the six years. Every six months, I have sent in a letter to them requesting the amount of money in pounds but then they never discussed anything about paying back in Swiss franc. I have not gone on holidays or anywhere but I saved all I earned and paid them 8000 pounds a year and finished my loan in 5 years. Please advise

As above, if he lent you the money in CHF then you should repay him the same amount in CHF.

Why do you think he should care that a currency that he does not use has moved up or down in the years since?

If you lent a friend £10,000 would you not expect £10,000 to be returned, even if they chose to spend the money in the US and the dollar dropped afterwards?

Kentish_Dave

Socajam wrote: »

You are bad as the idiot uncle, but that's another thread.
The uncle had all these years to inform the OP of the fluctuations in currency.

Why on Earth would he be expected to do that? As above, if you lent someone £10k would you not expect them to pay you £10k back?

Why, if the uncle paid the money in CHF would he imagine that he needed to point out that the OP choosing to change it into another currency would lead to currency exposure?

Candyapple

notforsale wrote: »

but his argument is that, when he gave the 40000 GBP it was equivalent to 84000 Swiss frac ( CHF).

The real question is - when your uncle lent you the money, what currency did he give it to you in? CHF or GBP?

MallyGirl

Since the currency fluctuation did not happen overnight then the exchange rates at the time of each repayment should be factored in. Messy.
If you had not been paying off the instalments then his figures would work - leaving aside any moral arguments.
So first £8k payment (if lump sum) probably was at a similar exchange rate to that of the actual loan start - you could work out the percentage of the outstanding balance paid off each time.

notforsale

to candy apple :
So my uncle knew my college fee is in GBP and he agreed to pay the amount in GBP. He basically exchange it to GBP and sent it tomy GBP account. I never had a Swiss franc account

notforsale

Just to clarify, I have actually paid the 40000GBP overthe last five years.
The total loan amount was lent to me over the 6 years of university period. So for each semister I borrowed money for expenses and for fees. All in wirtting I send them the amount needed in GBP. they send them to my account in GBP

Bermonia

Seriously... OP’s story has had more re-writes than a DC movie