I have been asked by realtives ans friends to "lend" them money. I want to charge "reasonable interest" to borrowers. (relatives and friends)
If you do decide to lend a small amount money to a friend or relative, you should just consider the money to be a gift because you may not ever be repaid. If it is to be a large loan, then set up the loan through Virgin Money. That way it is handled just like a bank loan. Contracts are signed, the interest rate and terms are all spelled out, the payments are all listed, and since it is a contract, it is legally enforceable. If the relative or friend doesn’t want to sign a contract as a sign of good faith, then I wouldn’t lend them anything.
The borrower makes their payment to Virgin Money and then Virgin Money deposits your check right into your account. If the borrower fails to make a payment, Virgin Money will go after them so that you don’t have to.
How do you calculate interest on a loan. I have been asked to loan money to relatives and friends.?
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If you do decide to lend a small amount money to a friend or relative, you should just consider the money to be a gift because you may not ever be repaid. If it is to be a large loan, then set up the loan through Virgin Money. That way it is handled just like a bank loan. Contracts are signed, the interest rate and terms are all spelled out, the payments are all listed, and since it is a contract, it is legally enforceable. If the relative or friend doesn’t want to sign a contract as a sign of good faith, then I wouldn’t lend them anything.
The borrower makes their payment to Virgin Money and then Virgin Money deposits your check right into your account. If the borrower fails to make a payment, Virgin Money will go after them so that you don’t have to.
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If you loan anyone money , friend/relative, I can guarantee that you will never hear from them again. Let them go to a bank and get a loan.
References :
Retired bill collector 35 years.