Advice for lending money to family/friends?
Question: This would be what i would do. Tell your brother if he’d like, he can take the money out of one of your credit cards. (Can you do a credit card check that gives you the same rate as purchases?) Make it a credit card with nothing on it and that you will not use. Then, he is solely responsible for making payments and getting it paid off. If he slips up, it will hurt your credit rating, so he needs to be responsible with it. Also, the interest is his responsibility.
WE have done this with 3 different siblings. Two paid the credit card off asap. One didn’t and we paid it off. We talked to him, told him we were disappointed, but that we’d just consider it a gift and then left it at that. He knows he won’t be “borrowing” anymore money from us.
I think making an outright gift isn’t a great idea. It can create an expectation that more gifts will follow.
Just my two cents, Maria
Answer: My husband loaned his brother several thousand dollars once because he was in a financial bind and had bad credit. He went to the bank and borrowed this money with the agreement that his brother would make the monthly payments. Well of course the first few months he did but after that it was one excuse after another and we had to make the payments in order to keep OUR credit in good standing. So naturally I confronted my brother in law and told him I wanted the full amount and I wanted it now. That went over real well with my in-laws and I was labeled the *bad* person by everyone except my father in law who MADE his youngest son pay the full amount due immediately. Needless to say it created a somewhat rocky relationship with the entire family and has never quite been the same since. I have loaned both my daughters money and they always pay me back promptly. But I would have to give some serious thought to lending others money, especially if they have a history of bad credit, obviously theres a reason why they have bad or no credit………
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