Use of interest free loan

My parents paid some time ago  a big bill for me which was of significant benefit. They have also offered me an interest free loan which although I do not need right now I am thinking i could deposit  in a savings account and return the interest I earn to my parents in gratitude for the bill they paid for me previously. My parents have no problem with the interest free loan knowing I would not use it right now. Could there be any reason that might be wrong in terms of tax or morality ?

Comments

  • Flugelhorn
    Flugelhorn Posts: 7,222 Forumite
    Part of the Furniture 1,000 Posts Photogenic Name Dropper
    If it is an interest free loan, what is the plan re making repayments? Are they giving it to you know for a specific purpose - just thinking if you don't need it now then maybe wait until you do - unless they are wanting to give money away for some other reason
  • DrEskimo
    DrEskimo Posts: 2,423 Forumite
    Seventh Anniversary 1,000 Posts Name Dropper
    Seems unnecessarily complicated for no reason….

    If you don’t need it, why not just let them put it into a high interest savings account to earn their own interest.

    Likewise you put whatever the monthly payment would have been in your own savings account so in future you won’t need to borrow from them. 
  • silvercar
    silvercar Posts: 49,346 Ambassador
    Part of the Furniture 10,000 Posts Academoney Grad Name Dropper
    Is it a loan or a gift? Is the plan that it becomes a gift in time? Only reason I can think of is to keep it out of their estate in the future
    I'm a Forum Ambassador on the housing, mortgages & student money saving boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Forum Ambassadors are not moderators and don't read every post. If you spot an illegal or inappropriate post then please report it to forumteam@moneysavingexpert.com (it's not part of my role to deal with this). Any views are mine and not the official line of MoneySavingExpert.com.
  • badmemory
    badmemory Posts: 9,439 Forumite
    Ninth Anniversary 1,000 Posts Name Dropper
    Is the plan to save them tax on the interest.  Possibly with a high income and having to pay over 20% or even over 40% tax on the interest.
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