What To Do?

[Sqad]

Local shop wanted a short term loan of €20,000 for one year and the bank agreed but wanted 6% interest.
I stepped in and an agreement was made, signed by all parties that I would lend them €20, 000 to be pain on the 1st January 2017 with the interest of €1,000 to be pain in cash.
So far so good.
They have now come into a "windfall" and want to pay the whole sum back NOW, some 6 months before it is due.

Fine.

I want the interest of €1,000 in cash.......not interested in the capital being repaid now.

If they repay the capital sum early can i reasonably demand the full interest i.e €1,000 in cash?

[wolf63]

Did any of your 'contract' cover the early repayment of this loan? Banks usually charge a fee when loans are repaid early.

[fiction-factory]

You could reasonably ask that or at least say pay me the full £21000 now or say you will wait for the full £21000 when the period ends. It may be worth negotiating something. TI don't see how they can insist on early repayment with reduced interest.
Are there laws though about unauthorised lending- i think there may be in the UK where I'd expect you to have to be registered as a lender and comply with certain regulations. i'm not sure of the position in Spain but you may find the contract isn't legal and therefore not enforceable- so perhaps take the best you can now

[Sqad]

No mention of early repayment in the contract.

[albaqwerty]

I hope you've got this contingency covered in a legal contract?

They, might, feel that they will only be liable for £500 as it's only been borrowed for half the length of time

[rockyracoon]

Not sure about the legalities of this, or even if there's a contract, but, I think they should pay you the full amount of interest. You was good enough to loan them the money and they were obviously happy as well. As Woof said, the bank would have early repayment penalties.

I think it's reasonable to expect full payment.

[ubasses]

What does the contract say, is there any early repayment clause in it which may benefit either party?
If it is very simple ie with amount lent and repayment date I do not see why you could not decline early settlement. Notice you are talking Euros so you would need to see if there are any laws in the relevant country covering a situation like this.

[Sqad]

ff..;-) "authorised lending" I thought was basically where a document was drawn up which gave the conditions of the agreement.
Does one have to be "authorised" to lend money?

[fiction-factory]

I'm not sure that the rules apply to loans to family and close friends but I guess there are rules if it's done as a business deal where a profit is made.
Also I understand that in the UK you'd be liable for tax on theincome you receive from the interest charge

[wolf63]

Sqad, I take it that you just agreed with the guy's offer. Wouldn't want you to be banned from his shop or brawling in the street (Mrs S would never forgive you)


:-)

[ummmm]

I would expect the 21k.

[whiskeryron]

Demand cash payment in Pesetas ( it wont be too long before Euros fade from memory)

[Sqad]

FF....of course i will declare the interest gained to the Spanish Renta. ;-)

wolf......Mrs sqad is their best costumer.......

[albaqwerty]

so would I ummm, an agreement is an agreement. if reneged upon then hell then them who reneged.

[albaqwerty]

^mend

[Maydup]

If there is no mention of early repayment in the contract then the full amount is due, on or before 1st January 2017. That's how I see it.

[ubasses]

As there is nothing in the contract, it is now a case of negotiation, you put forward your case and he does the same and you come to a compromise. At the end of the day a lot depends on how much you value any relationship you have and how that will work in the future.

[ummmm]

My gramps lent me the money to buy my first house. He went to his accountant to find out how much it'll cost him in lost interest etc....Hand shake and paid him back what he asked. You don't get money for nothing.

[Prudie]

If you had no early repayment clause i think you have 3 options:
Insist on 1000 now and maybe cause bad feeling
Insist they keep to the contract and give you 2100 in January
Ask for 500 now to maintain good relations

Are these friends or people you know well?

[Sqad]

Yes Prudie.......we do know them well.

[fiction-factory]

Negoitate to take say £20700 now- then put £20000 in Santander account paying 3% and invest the remainder elsewhere -and your money will be worth £21000 by January