Loaning money to a friend .

[david11]

It is not a small amount,25thousand pounds,but should i rely on a purely verbal agreement,or should i get something put down on paper.He is a really good and honest friend,and would do all in his power to repay me,but life is full of strange twists.I,d rather prepare something myself that could be witnessed if need be,keeping things simple,Thanks for any advice on this one

[Ethel]

Lending and borrowing money is the quickest way of losing friends.

However, if it is what you want to do, you must get a proper contract in writing. It should state the amount borrowed, and the agreed repayment schedule.

You should also keep a record of payments received - signed by both of you each time. He should do the same. If it is to be repaid by direct bank transfer, this should be stated in the contract, and statements kept.

This is because if your friend dies you need to prove his estate owes you money. This should not cause offence to your friend - anyone would see this as common sense.

[david11]

Thanks Ethel,he said he would make a new will,but he gets married in 6 months,so thats no good,sorry to ask,can i prepare it myself or should i go to a solicitor

[dzug]

It's nothing to do with whether he has made a will or not or whether that will is valid. His estate owes you regardless.

But for his estate to pay you, you have to prove he borrowed the money - hence a written agreement. You don't need to involve a solicitor, just document it.

[david11]

Thanks dzug,as ethel commented,loaning money can have its pitfalls.speak to him at weekend and put pen to paper.should make both of us happy

[dzug]

I think Ethel would actually give the same advice as me -DON'T DO IT - but if you must, safeguard yourself.

[Oneeyedvic]

I would also concur with the don't do it.

A good friend of mine once said: "only loan money that you can afford to lose". If you do loan the money, I would consider that the money has gone - if you get it back its a bonus.

The trouble with writing a loan agreement yourself is that if you get anything wrong then the document could be invalid - and therefore null and void.

I would also be inclined to lend �25,500 as this would then be outside of the scope of the Consumer Credit Act.

If you need a copy of a 'proper' loan agreement, I can send you a blank facility letter which would stand up in court (so long as it is over �25,000). You can contact me at [email protected]

[netta]

PLEASE DONT DO IT DAVID !!! I did this 4 years ago to a really good honest friend of 15 years and had aletter from him signed stating that he intended to repay asap. I am now having to go through the court system as he has done a runner after selling his house,have been to solicitore etc am now going it alone and the stress is incredibly hard to bear. I am now living in rented accom declared myself bankrupt all because I had faith in a friend. Think long and hard please. Netta

[WendyS]

PLEASE think long and hard about this. No matter how good a friend he is, things can go wrong in his life which might prevent him repaying the money. What happens if his new marriage breaks down? You can bet your bottom dollar that his wife won't feel any moral obligation to repay you.
If you still feel you should go ahead, DON'T have a verbal agreement. Get a signed contract showing the sum loaned and how regularly it will be repaid, and I suggest you have this done on a regular basis by monthly standing order. If you rely on him repaying "as and when he can afford it" you will be left hanging wondering whether you will ever see your money back, whereas regular payments will give you the ongoing comfort of knowing he is serious about repaying the debt.
Personally I wouldn't loan the money though. These threads are full of people who have loaned money in good faith to people they trusted and have had their fingers burned. Only go ahead if you can ultimately afford to write the whole �25,000 off.

[david11]

Thanks to you all for your sensible advice,in the last few days i have learnt something,i asked him of what i had been told,and he said it was true,i said im not prepared to loan him the money under the circumstances,and i said it was totally selfish and unfair not to disclose this to me,as he knew if he had i would have said no.I told him you are still my friend,but not my mate.( He's fell in love with a fillipino girl,brought her to uk,i hope it works out for him,but her profile seems to suggest otherwise,he wants to stop living with the fairys,this is going to ruin him )

[WendyS]

Sounds as if you are well out of this arrangement. You have probably just saved yourself �25,000. of your hard earned money. You have obviously learned that even good friends can be economical with the truth when they want something from you. You have also learned that this so-called friend is less than 100% trustworthy when it comes to the way he handles his financial dealings. Keep the money in a good savings account. You may need it yourself some day.