Charging Interest When You Lend

Discussion in Loans started by Onionman • Jul 27, 2015.

  1. Onionman

    OnionmanActive Member

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    Do you charge an interest rate if you lend to friends or family?

    I've never lent out an amount that seemed to justify that but ultimately by doing so and makes the loan more of an official transaction. And in doing that I would have thought you would more likely get your money back.

    Has anyone tried it?
     
  2. GemmaRowlands

    GemmaRowlandsActive Member

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    I have never done that, no, because any family members who have borrowed money from me have done so because I feel able to help them - not because I want to make money from them. If I charged interest, they may as well have just gone to a bank, and obviously they didn't want to do that. I want to help my family, not charge them, and I would only ever lend any money to people who I knew and trusted anyway.
     
  3. Denis Hard

    Denis HardWell-Known Member

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    If I had to lend a friend some money I wouldn't charge them an interest because should I ever need to borrow money from them or get any help from them they won't won't charge an interest or make me pay for some service. The savings I'd make are well worth it.

    As for lending money to friends at an interest I think it would give them a good reason not to pay back the money. It [defaulting] wouldn't make them feel bad because by doing so you prove you aren't as good a friend as they previously thought you were.
     
  4. missbishi

    missbishiWell-Known Member

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    Good lord, no! Only the truly mercenary would do something like this. Now I might feel easier about asking the lendee for a favour in return if I needed it, I'd never ask for interest. That is greedy.
     
  5. Corzhens

    CorzhensWell-Known Member

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    The Bible said that charging an interest on loans is not good and a high interest is usury. But if we lend money with nothing in return, that would put us on the losing end. That is our primary reason why we do not lend money to anyone so our relationship would not be stained by that transaction. If we were not paid then we lose money and we lose a friend as well.
     
  6. xTinx

    xTinxWell-Known Member

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    Not really. That's why it irks me to the marrow when friends and family members borrow from you and fail to inform you whether they'd be able to pay on the date agreed upon. Anyone would have the decency to tell you when they'd be able to pay you back. I'm not a millionaire. Neither am I earning much. In the past, all I got was a load of empty promises from so-called friends who only treated me like a convenient loaning center. The last person who borrowed money from me and failed to communicate with me for a month thereafter really got a piece of my mind. That was a completely interest-free "loan." If someone is close to or acquainted with you, there's no need to impose any interest. Unfortunately, she never learned how to save no matter how many times I scolded her. Now, my life is relatively calm. No more people pressuring me to generate instant money.
     
  7. remnant

    remnantActive Member

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    I normally don't expect interest on small loans if I advance them to my friends or family members. If they return the loan with a small amount on top as a sign of gratitude, this is always welcome. However, this creates the same expectation on my part if I am advanced the same.
     
  8. Sealpikachu

    SealpikachuMember

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    I have never charged any interest but I have an aunt that does. Most people are fine with it since she will lend out any amount to help out. People mostly go to her when they're desperate since she does overdo the interest a bit.
     
  9. Denis Hard

    Denis HardWell-Known Member

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    I suppose borrowing from a friend even if they charge some interest beats getting a loan from an institution. Though they might pressure you to repay the "loan" if you have good reasons for failing to pay back the money on time, they may let you pay back the money any time you can. It beats getting a loan from an institution.
     
  10. johndee

    johndeeMember

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    If a friend approached me to get a personal loan, isn't it obvious that they are trying to get some quick cash from somebody they trust can help? They also believe that borrowing from me won't cost them in the form of interest.

    I would lend to a friend I trust anytime if I am able to and expect nothing above the actual money I lent. After all, what are friends for? I am sure of reaping some interest in the form of increased goodwill.
     
  11. rickymuus

    rickymuusNew Member

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    @Onionman@Onionman Well I have not before but I have been thinking about this lately. Lending out your money to people should be a form of investment. Any good friend will understand the need for you to charge interest. You also gain value and its a win win for everyone. Problem with lending out to friends is that it becomes quite difficult to ask for your money back when you need it or after the agreed term expires.

    @Corzhens@Corzhens I understand your decision not to lend money to friends. If they are unable to repay, we lose both the money and the friendship and all this is because of money. It's a sad state of affairs. However, I believe borrowing money should be a concrete decision and one should have a means of repaying it back if they choose to borrow.
     
    #11Sep 8, 2016
    Last edited by a moderator: Sep 9, 2016
  12. abonnen

    abonnenActive Member

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    I only charge interest when my husband borrows my money ..hahaha..just kidding...I wish I would be rich. Anyway no i have never charged interest or had interest charge to me when borrowing money from family.
     
  13. djdontpay

    djdontpayActive Member

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    Only when I lend online, do I charge an interest. I can do that because those websites do most of the heavy lifting for me such as getting signatures, post dated cheques, etc. As a lender, all I have to do is show up with the money.

    But, when I lend to family or friends, I never charge interest. That would be bad. First of all, lending to family or friends is a bad idea, unless you are prepared to ruin your relationship with your relatives. Second of all, it always helps to not charge interest. Lastly, it would be rude to charge interest from someone who's facing an emergency.
     
  14. atlmom5

    atlmom5Active Member

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    I don't lend money out to people. If they need money and I'm able to help then I just give to them, if they want to pay me back then I'll take it, but if they don't....then they don't. I'm just over lending and loaning money out to people, so that being said, I surely can't tack on interest to someone....that's just wrong to me.
     
  15. Vinaya

    VinayaActive Member

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    If I am lending a big amount, I will definitely charge interest. However, until now I have never lend a big amount to my friends or relatives. I have off course paid interest for the money I burrowed from my friends and distant relatives. We don't charge or pay interest for the money we burrow and lend with parents and siblings
     
  16. Decentlady

    DecentladyActive Member

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    I haven't lend a big sum to relatives yet. I guess I would be too embarrassed to charge them interest even if I did.

    Generally, I avoid such exchanges among relatives for obvious reasons.
     
  17. luckycharm

    luckycharmActive Member

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    In my case if I lend money to my friends and relatives I am not going to charge any interest on the amount. It is purely on personal grounds otherwise it may spoil our relationships. When I charge interest on that it would become an official transaction and I am not doing this for making money. I would be just helping them in times of need. in future may be I am also in a similar situation and if they charge interest on me I won't feel nice.

    But if lending money is my profession there is nothing wrong in charging interest on the money lent. I am sure nobody would find it wrong if you charge interest then.
     
  18. ptahm22

    ptahm22Active Member

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    I think it's unfair to charge interest, especially to your family members. I would prefer giving to them or asking them to pay just half of the loan. It's actually against our culture to charge interest on a loan if you don't run a lending company.
     
  19. Binu

    BinuActive Member

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    When I am lending a small amount which the burrower promises to pay back in few weeks, I never charge interest. However, when I am lending big amount which will be returned after a long time, I will charge interest. The normal interest from the private investor is around 24 percent per year. Since I pay this interest rate when I am burrowing, I also charge this interest rate when I am lending.
     
  20. efrain silva

    efrain silvaMember

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    For me, it really depends on certain key factors. I try to bring everything into account. I look at the specific situation and need, the person involved, the length of time to promised repayment, etc. You can't just base it off of one or two little factors to make a determined choice. Look at the whole piece....