They may be considering helping a relative or friend who is struggling with debt or supporting a family member who lost their job. These goals are laudable, but pay attention before lending money to the family .
In fact, according to a recent survey, 43% of readers who loaned money to family or friends did not receive the return payment in full and 27% have not received a penny back. To avoid family problems , follow these steps before offering money.
Check your reservations
You have to verify that the credit does not put your withdrawal at risk. Calculate your income to see if you will be able to comfortably manage your income if that money is not returned.
Nor should they play banker if it involves borrowing or having to sell assets they are not ready to sell, especially if the latter put capital gains taxes at risk.
If you are lending money to your children, involve your brothers and sisters ; a large loan could reduce the funds available to others.
Examine the borrower
Ask that person for a credit score so you can see how they have handled their other credits (look for late payments and delinquencies).
Also ask for a debt repayment plan. This will help them see if the borrower is willing to take the deal seriously. If there is a business loan , make sure you have a copy of the business plan.
Definitely do not make any fault credit. Try to view the operation objectively.
Families almost always lower the interest rates on personal loans, but if they are lowered too much, they can lose money. For starters, you are supposed to file and pay taxes based on interest earned.
Set the payment schedule with the credit, and finally clarify the rights you have with the lender. If you are rescuing a child with debt, you may want to stipulate how you spend your money until you pay them back.
Leave it in writing
It is very helpful to have everything on paper, both for tax and personal purposes. Leaving the agreement in writing emphasizes that it is a business agreement.
You may choose to involve a third party to manage the credit for you, or download a promissory note form from the Internet. Include the amount, interest rate, and repayment schedule.
These tips could avoid problems with your family or friends
If the family loan puts your family stability or your money at risk, consider asking the professionals of Fine Bank without obligation; We are specialists in Fast Online Private Capital Credits , providing solutions immediately and in a comfortable way.