Offering a Loan to a Friend

Fingerbobs

Firstly, apologies if this is the wrong forum for this query. I couldn't see a more suitable one, but I appreciate it's not quite the right topic, so I fully anticipate the post being moved :-)


A friend was looking to upgrade their mobile phone handset via their network provider, and I pointed out that it would be much cheaper in the long run to buy the phone SIM-free from a retailer, and just remain on their existing mobile tariff.


As they can't afford the full cost up-front, I've suggested that I could purchase a discounted Gift Card (via my employer's perks scheme), and they could use this to buy the phone and pay me for it at the same rate that they would have paid their network provider.


Basically, I'm buying them a Gift Card for a specific retailer, and they are paying me for it in instalments over a period of time.


Obviously I don't anticipate any problems or I wouldn't even entertain the idea, but I would like to formalise this loan on paper, so I would have some recourse should things happen go wrong further down the line.


Can anyone recommend a free template I can use for the agreement? There are loads out there on the Web, but I don't just want to pick a random one in case it's not "watertight" if you know what I mean.

newatc

In my experience lending to a friend is a good way to lose both friend and money.

[Deleted User]

I wouldn't bother with an agreement.

Even if you have one, you still need to go through the various legal channels to enforce it and if he doesn't have the money, you still won't get your money back.

If you lend it to him, just assume you won't get it back. If you do, it's a bonus.

sourcrates

Before you lend the money make sure you agree exactly:

• How much you will lend
  
• The interest rate
  
• The term
  
• How much they will be expected to repay each month
  

It is essential that you are both aware of all of these conditions before any money is exchanged.
Write a contract

Drawing up a written agreement or contract which lists all the agreed terms of the loan makes it clear what you are agreeing to, and also provides you with a record of the agreement should there be any dispute.
You and your friend should both sign it in the presence of independent witnesses.


Even doing all this does not guarentee you will be paid back, if the borrower does fail to repay the debt, then the legal system is there for you to use.


As a warning to you, this forum has had hundreds of such posts such as yours where the debtor bid not repay the lender, and both money, and freindship were lost.

Sea_Shell

They should save up and/or buy a cheaper phone!!

If you're happy to possibly lose your money, your friend, or both, go ahead.

Agreements are worthless unless you're prepared to go to court to enforce them!

RyanEzio

I wouldn't bother of I was you. Why have a phone so expensive?

[Deleted User]

Friends/family and money never mix well.

foxy-stoat

Fingerbobs wrote: »

Can anyone recommend a free template I can use for the agreement? There are loads out there on the Web, but I don't just want to pick a random one in case it's not "watertight" if you know what I mean.

Apart from receiving answers to questions you didn't ask, all correct by the way, if you have found a free template then use it if you feel you have to. Nothing will be "watertight", and I do not know what you mean. Unless your in the business in loaning money, and have the resources and time to chase people down for ever to get your money back then forget about trying to formalise this loan. We will see you in a few months when your friend stops paying you and you start asking questions about claiming your money back.

Good luck, you may need all of it.

Fingerbobs

Thanks all for the advice.


I have taken all this on board, and thought very carefully about the consequences, and reached the conclusion that it's not worth it. It's none of my business if they want to pay for a stupidly expensive phone - that's up to them - but they can just pay for it via their contract as they were planning to do anyway. I just thought I could save them some money, but it's not worth the potential hassle further down the line if things go pear-shaped.


Thanks.

tealady

There is a very old saying which goes something like this.
"Never lend people money that you cannot afford to lose"
You made the right decision IMO.

TripleH

Well done fingerbob forvat least thinking of and trying to help a friend save money. Hopefully your friend may deep down have a lightbulb moment and if they have to have the latest phone, mightvthink about creating a fund to save up for the next one.