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  • FIRST POST
    • Simon81424
    • By Simon81424 9th Nov 18, 3:48 PM
    • 2Posts
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    Simon81424
    Can my parents take out a loan for me?
    • #1
    • 9th Nov 18, 3:48 PM
    Can my parents take out a loan for me? 9th Nov 18 at 3:48 PM
    Hi Everyone,

    Can my Dad take out a loan and give me the money?

    A little background - I am about to get married (Less than 6 months away), and my Fiancee and I have paid deposits for our wedding and honeymoon. Prior to this we were carrying a manageable level of debt, but recently my partner has had to leave her job through stress, and will not be returning to her industry. Her role was very well paid, and we were relying on this to fund our wedding and honeymoon. We are now left with bills that need to be paid in the next 4 months, which we cannot pay. She is self employed and has poor credit history (due to a delinquent ex, who is still on the mortgage) so a secured loan would be difficult and a remortgage is impossible.

    As a result, I am holding total debt for both of us. We have been comfortably paying this down, but as it appears to any lender that I am carrying a large debt alone it means that I am struggling to get credit or refinance.

    <End of Background>

    To remedy this, I have asked my Dad to take out a personal loan at a good rate, pay the money into my account, and for me to pay the installments. He is provisionally on board, but we are unsure how and if we can do this.

    There is information available about the dangers of this method of lending, but I can't find anything in the way of advice.
    • Is this possible / legal?
    • Would this method constitute a gift, and therefore be subject to tax?
    • Should I approach a financial adviser about this?

    Thanks for reading.
Page 1
    • zx81
    • By zx81 9th Nov 18, 3:53 PM
    • 19,423 Posts
    • 20,769 Thanks
    zx81
    • #2
    • 9th Nov 18, 3:53 PM
    • #2
    • 9th Nov 18, 3:53 PM
    Yes they can, but they need to find a lender who is happy with it

    Gifts aren't subject to tax, unless the giver dies within the next 7 years.

    However, if you're already in debt for the wedding an honeymoon already, and need more debt to actually get that far, it may be time for a rethink.

    You're potentially getting into a lot of pain for a party and holiday.
    • Willing2Learn
    • By Willing2Learn 9th Nov 18, 3:56 PM
    • 1,752 Posts
    • 1,342 Thanks
    Willing2Learn
    • #3
    • 9th Nov 18, 3:56 PM
    • #3
    • 9th Nov 18, 3:56 PM
    If your combined income is reduced due to the poor psychological health of your fiance, then can you be sure you will be able to afford repayments on your current debt, plus repayments on an additional loan?

    I suggest you do a combined SOA to see where your monthly budget is. You can then work out what is, and what is not affordable.

    Edit: And welcome to the forum
    Last edited by Willing2Learn; 09-11-2018 at 4:01 PM.
    I work within the voluntary sector, supporting vulnerable people to rebuild their lives.

    I love my job

    • MallyGirl
    • By MallyGirl 9th Nov 18, 3:59 PM
    • 3,058 Posts
    • 8,089 Thanks
    MallyGirl
    • #4
    • 9th Nov 18, 3:59 PM
    • #4
    • 9th Nov 18, 3:59 PM
    Your Dad can do what he likes with his money - it will become his when the loan amount lands in his account. There is no tax involved.

    This board is littered with people who have lent money to family never to see any of it paid back That is the risk your Dad would be taking. You need to think about whether you genuinely can pay him back in a reasonable time frame.
    Maybe it is time to scale back on anything in the wedding that is not set in stone - it is not great to start married life with a huge debt hanging over you, especially if your fiancee is already suffering from stress.
    • PRAISETHESUN
    • By PRAISETHESUN 9th Nov 18, 4:01 PM
    • 469 Posts
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    PRAISETHESUN
    • #5
    • 9th Nov 18, 4:01 PM
    • #5
    • 9th Nov 18, 4:01 PM
    I would be posting on the DFW board and asking for tips on how you can help bring your debt under control - the fact that you would have to resort to something like this makes me wonder if you can realistically afford what you are proposing. You don't need to spend big to have a wonderful and memorable wedding/honeymoon.

    As for CAN you do it, on paper I can't think of any reason why as long as your Dad was honest to the lender about what the money was for - many lenders may not be happy with that, but you may find one that is. Keep in mind that if something were to happen and you became unable/unwilling to pay the debt, it would be your father who is liable, not you, and the banks would come after him. It may help to think about/plan for how that might affect your relationship if that were to happen.
    • AnotherJoe
    • By AnotherJoe 9th Nov 18, 4:13 PM
    • 11,584 Posts
    • 13,416 Thanks
    AnotherJoe
    • #6
    • 9th Nov 18, 4:13 PM
    • #6
    • 9th Nov 18, 4:13 PM
    Can your dad take out a loan. - yes of course he can as long as he passes the lender's checks.
    Can he give you the money - he can give it to whoever he wants
    Can you pay him back - = same thing as "can you give your dad money"
    Gift tax - no such thing.
    Financial adviser - no

    I suggest you consider if you wish to formalise this arrangement with a note acknowledging you owe this money and what the terms you will pay it back will be.
    Please dont criticise my spelling. It's excellent. Its my typing that's bad.
    • sourcrates
    • By sourcrates 9th Nov 18, 4:28 PM
    • 15,776 Posts
    • 14,830 Thanks
    sourcrates
    • #7
    • 9th Nov 18, 4:28 PM
    • #7
    • 9th Nov 18, 4:28 PM
    Hi,


    Further borrowing when already in debt is a very bad move, it just leads to more debt, then even more debt when you can`t pay that off, basically its a very slippery slope, and before long your looking at Bankruptcy or many years in debt management.


    Try to nip this in the bud now, get yourself over to the debt free wannabe forum and we can help you pay back what you already owe, without adding more to it.
    Last edited by sourcrates; 09-11-2018 at 4:54 PM.
    I'm a Board Guide on the Debt-Free Wannabe, Credit File And Ratings, and
    Bankruptcy And Living With It, boards. "I volunteer to help get your forum questions answered and keep the forum running smoothly".
    Board guides are not moderators and don't read every post. If you spot an abusive or illegal post then please report it to forumteam@moneysavingexpert.com. Any views are mine and not the official line of MoneySavingExpert.com.

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    • ska lover
    • By ska lover 9th Nov 18, 4:47 PM
    • 2,907 Posts
    • 7,120 Thanks
    ska lover
    • #8
    • 9th Nov 18, 4:47 PM
    • #8
    • 9th Nov 18, 4:47 PM
    Id agree with the above, getting yourself into debt now would be a bad idea for you and for your parents too. some insight into how your parents might feel....If I took out a loan for my son in your situation it would cause me a great deal of anxiety if he was unable to pay IYSWIM. It is like taking on a guarantor for a person,


    IMO the sensible thing would be to cut right back on the wedding or postpone - I don't mean to sound grinchy saying that but it does seem the common sense approach to me
    The opposite of what you know...is also true
    • Simon81424
    • By Simon81424 9th Nov 18, 5:16 PM
    • 2 Posts
    • 0 Thanks
    Simon81424
    • #9
    • 9th Nov 18, 5:16 PM
    • #9
    • 9th Nov 18, 5:16 PM
    Thanks for all the replies people. To address some of your questions;

    - The loan is affordable. Tesco (and a few others) have a rate of 3%, and I've calculated the payments to be within what we can afford.
    - I'm not against moving the wedding and honeymoon, but we're going to lose our deposits.
    - A lot of you have said that there is no 'Gift Tax', but HMRC seem to disagree. (I can't link to the page, but if you search "how much money can you give as a gift uk" there is .gov.uk that states the maxium is £3000.) Am I reading this wrong?

    Thanks again for the responses.
    • zx81
    • By zx81 9th Nov 18, 5:21 PM
    • 19,423 Posts
    • 20,769 Thanks
    zx81
    HMRC agree with us.

    The £3k limit you're reading about is the limit for the gifts not being added to your estate, if you die within 7 years.
    • -taff
    • By -taff 9th Nov 18, 5:30 PM
    • 8,753 Posts
    • 8,177 Thanks
    -taff
    So basically, you're talking about a consolidation loan that you will be paying to your father?
    Have a think about whether it's a good idea to get into more debt for the sake of a wedding. Thrwing more money at getting married is a bad idea, if you lose your deposits, then at least you're losing a finite amount of money, and if your fiancee is already financially linked via a mortgage to someone else with a bad credit history, and you have no money to pay the bills, all you're doing is getting deeper into debt, the same as she was with her ex.
    You're also not doing your father any favours because as you say, she's out of work and you can't pay the bills. What happens when you can't pay him back because that is a distinct possibility.
    You've already found that not all jobs are secure, yours may not be either. To get yourself, your fiancee and your father into debt for the sake of a wedding is a bit mad really.
    Go to the debt free wannabe board for help with budgeting.
    • marcarm
    • By marcarm 9th Nov 18, 5:55 PM
    • 832 Posts
    • 994 Thanks
    marcarm
    Would you rather lose £500 on a holiday deposit or take out more debt to the tune of £2k (for example) that you might not be able to pay back?

    Don't drag your father into your situation, move dates or postpone the honeymoon, and use that as a reward when you get yourselves straight.

    good luck
    • AnotherJoe
    • By AnotherJoe 9th Nov 18, 6:55 PM
    • 11,584 Posts
    • 13,416 Thanks
    AnotherJoe
    Thanks for all the replies people. To address some of your questions;

    - The loan is affordable. Tesco (and a few others) have a rate of 3%, and I've calculated the payments to be within what we can afford.
    - I'm not against moving the wedding and honeymoon, but we're going to lose our deposits.
    - A lot of you have said that there is no 'Gift Tax', but HMRC seem to disagree. (I can't link to the page, but if you search "how much money can you give as a gift uk" there is .gov.uk that states the maxium is £3000.) Am I reading this wrong?

    Thanks again for the responses.
    Originally posted by Simon81424

    Yes you are.

    (as said its all to do with inheritance tax. Dont worry about it.)
    Please dont criticise my spelling. It's excellent. Its my typing that's bad.
    • Grumpelstiltskin
    • By Grumpelstiltskin 9th Nov 18, 7:06 PM
    • 2,318 Posts
    • 2,497 Thanks
    Grumpelstiltskin
    My take on this is that the loan is for over £3000, otherwise why would the OP mention that amount?

    OP the idea is plain stupid and 2 things.

    Just because Tesco advertise loans at 3% doesn't mean they will offer your father that rate.

    If I were your father I wouldn't touch this idea with a barge pole bearing in mind your combined income has reduced. It is almost bound to come back and slap him in the face when you can't pay him back.


    Forget the whole scheme.
    • Clive Woody
    • By Clive Woody 9th Nov 18, 8:01 PM
    • 4,534 Posts
    • 5,118 Thanks
    Clive Woody
    You are assuming that your dad would get a loan at their representative rate of 3%, it could be a lot higher. What then?

    Can your dad afford to pay this loan if your situation changes again and you cannot?
    Rugby Union - The Greatest Game
    • ratrace
    • By ratrace 9th Nov 18, 8:44 PM
    • 682 Posts
    • 468 Thanks
    ratrace
    It may seem harsh what all the posters are saying but they are making a very good point, also can your oh get a delivery driving job or even instore at a local dominos/pizza hut i have done this in the past when my hours were cut it dosent have to be forever but at least its somthing to keep the bills paid

    you really need to think where is this going and where you are going to be in a few years time for eg: what going to happen after you are married are going to move into another house etc... how long is she plannig on not working (dont want to be harsh but it cant really be for a long time as you cant afford not to) do you plan on having any kids if so who is going to look after the child is one of you going to stay home or are you going to get childcare (which is expensive) if one is going to stay home can you get by with another mouth to feed on 1 income ect....

    you have to take all this into account op, we dont want to be all doom and gloom but what we are being is realistic and living in the real world which is expensive


    i hope you dont take out advise the wrong way it may come across as harsh but trust me its coming from a good place
    People are caught up in an egotistic artificial rat race to display a false image to society. We want the biggest house, fanciest car, and we don't mind paying the sky high mortgage to put up that show. We sacrifice our biggest assets our health and time, We feel happy when we see people look up to us and see how successful we are”

    Rat Race
    • Rainbowgirl84
    • By Rainbowgirl84 9th Nov 18, 9:00 PM
    • 607 Posts
    • 1,002 Thanks
    Rainbowgirl84
    Taking out a loan for a wedding is seldom a wise move. Getting a parent to do so is never a wise move.
    • Rainbowgirl84
    • By Rainbowgirl84 9th Nov 18, 9:08 PM
    • 607 Posts
    • 1,002 Thanks
    Rainbowgirl84
    Hi Everyone,

    Can my Dad take out a loan and give me the money?

    A little background - I am about to get married (Less than 6 months away), and my Fiancee and I have paid deposits for our wedding and honeymoon. Prior to this we were carrying a manageable level of debt, but recently my partner has had to leave her job through stress, and will not be returning to her industry. Her role was very well paid, and we were relying on this to fund our wedding and honeymoon. We are now left with bills that need to be paid in the next 4 months, which we cannot pay. She is self employed and has poor credit history (due to a delinquent ex, who is still on the mortgage) so a secured loan would be difficult and a remortgage is impossible.

    As a result, I am holding total debt for both of us. We have been comfortably paying this down, but as it appears to any lender that I am carrying a large debt alone it means that I am struggling to get credit or refinance.

    <End of Background>

    To remedy this, I have asked my Dad to take out a personal loan at a good rate, pay the money into my account, and for me to pay the installments. He is provisionally on board, but we are unsure how and if we can do this.

    There is information available about the dangers of this method of lending, but I can't find anything in the way of advice.
    • Is this possible / legal?
    • Would this method constitute a gift, and therefore be subject to tax?
    • Should I approach a financial adviser about this?

    Thanks for reading.
    Originally posted by Simon81424
    Thanks for all the replies people. To address some of your questions;

    - The loan is affordable. Tesco (and a few others) have a rate of 3%, and I've calculated the payments to be within what we can afford.
    - I'm not against moving the wedding and honeymoon, but we're going to lose our deposits.
    - A lot of you have said that there is no 'Gift Tax', but HMRC seem to disagree. (I can't link to the page, but if you search "how much money can you give as a gift uk" there is .gov.uk that states the maxium is £3000.) Am I reading this wrong?

    Thanks again for the responses.
    Originally posted by Simon81424


    Care to 'square' how these two bolded statements are remotely possibly true?


    You can 't afford your current debt but can afford to take out more?
    • kerri gt
    • By kerri gt 9th Nov 18, 9:10 PM
    • 7,573 Posts
    • 52,012 Thanks
    kerri gt
    Although you have put down deposits for the wedding / honeymoon are these amounts you could if push comes to shove, afford to wave goodbye to rather than take on more debt? I know it isn't a desirable option but if your OH is already suffering stress then adding more debt is only going to add to that, let alone the stress of actually organising the wedding.

    Could you do one or the other and change plans accordingly? Can you scale either back to what you can afford?

    Whilst its very generous of your father to potentially take out a loan, I would be looking at all options not to do this.
    Feb 2015 NSD Challenge 8/12
    JAN NSD 11/16


    • zippygeorgeandben
    • By zippygeorgeandben 9th Nov 18, 10:07 PM
    • 945 Posts
    • 1,294 Thanks
    zippygeorgeandben
    So much good advice here. Please do not decide that to cheer your fianc! up that you'll go through with paying through the nose for a wedding.
    You aren't getting married for a big party, it's for the times after, good and bad, rich or poor.
    Don't drag your dad into it, you know it's the right thing to do.
    Savings End October 2018 £2240.13
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