If you loaned one of your children some money...

[Julie in CA]

Assuming you had plenty of money, and you loaned your adult child $4500, and they paid back $1000 a month, every month, on time, would you charge them interest? If so, how much?

[Renee in NC]

Assuming you had plenty of money, and you loaned your adult child $4500, and they paid back $1000 a month, every month, on time, would you charge them interest? If so, how much?

 

No, I wouldn't - not for that short of a period of time.

[Caitilin]

Definitely would not charge interest. :)

[Mrs Mungo]

No, I wouldn't - not for that short of a period of time.

 

:iagree:

[Starr]

No I wouldn't charge interest. I would be thankful they were responsible and paid back per agreement.

[mazakaal]

Personally, I wouldn't charge interest either, not for such a short term loan between family members.

[Lolly]

:iagree:No interest.

[OLG]

I wouldn't charge any interest with payments coming back so quickly. But I come at this from witnessing my grandparents loaning my parents money. (Struggling musicians their whole life) One set gave it freely without interest; the other gave it at the time but deducted it from inheritance....

 

Personally, I have been on both sides of this too. Never was interest charged nor expected. Now, if these are young kids, that might be another story if you want to teach the value of taking out a loan. But loan rates are so low right now, it's peanuts on that amount.

 

Just my thoughts.

 

Mary

[bettyandbob]

If the loan was to help the child resolve a problem that resulted from irresponsible behavior, I may charge interest at below market rates and I may put the loan in writing.

 

If the loan is for a major purchase (car) or school for a person who otherwise has been very responsible with money then I might not charge interest at all.

 

I don't have a child old enough to ask for this kind of money. If I did right now, he wouldn't be able to get that much from me no matter how much I wanted to loan him. So, my thoughts may not be realistic b/c I'm just not there yet.

[woolybear]

Nope.:)

[LibraryLover]

I would have given them the money in the fist place, as long as they had previosuly shown themselves to be responisble and thoughtful. Going along with the 'plenty of money' theme, If the money went towards fixing a roof, or music lessons etc for granchildren, I would have written a check directly to the contractor/program, in fact.

 

I really hope the economy rebounds and our investments mean something someday, because nothing will give me greater pleasure than helping my kids and grandchildren enrich their lives.

[NoPlaceLikeHome]

Definitely would not charge interest. :)

 

:iagree:

[NoPlaceLikeHome]

I would have given them the money in the fist place, as long as they had previosuly shown themselves to be responisble and thoughtful. Going along with the 'plenty of money' theme, If the money went towards fixing a roof, or music lessons etc for granchildren, I would have written a check directly to the contractor/program, in fact.

 

I really hope the economy rebounds and our investments mean something someday, because nothing will give me greater pleasure than helping my kids and grandchildren enrich their lives.

 

:iagree:

[lynn]

No, I would not charge interest.

[Mommyfaithe]

Assuming you had plenty of money, and you loaned your adult child $4500, and they paid back $1000 a month, every month, on time, would you charge them interest? If so, how much?

 

No, I wouldn't charge them interest...especially if they were making an effort to pay back in time. That is what Mom's and Dad's are for...a safety net...

 

Faithe

[Mommyfaithe]

I would have given them the money in the fist place, as long as they had previosuly shown themselves to be responisble and thoughtful. Going along with the 'plenty of money' theme, If the money went towards fixing a roof, or music lessons etc for granchildren, I would have written a check directly to the contractor/program, in fact.

 

I really hope the economy rebounds and our investments mean something someday, because nothing will give me greater pleasure than helping my kids and grandchildren enrich their lives.

 

:iagree::iagree:

[Julie in CA]

I (thru my dh) borrowed $4500 from mother-in-law to make up the shortfall for ds's college tuition. We didn't make any arrangement for how much I'd pay back each month, but I've been sending $1000 because I'd like the debt *gone*. I have $1500 left to pay, and one of my dh's brothers has now mentioned that I need to pay interest. I think it's fair for me to pay interest in theory, but since I wasn't aware the loan came with "terms", I admit to being slightly disgruntled (even though I *know I shouldn't be*). Because I don't have a credit card, and I don't borrow money under ordinary circumstances, I have no idea what is a fair amount of interest to pay. :confused:

Edited November 15, 2010 by Julie in CA

[GraciebytheBay]

I wouldn't charge interest. One of the advantages of borrowing from parents should be no interest, imho. If the child borrowing needed incentive to pay on time (i.e. If I wasn't sure if they were responsible enough to handle a loan), I probably wouldn't give them the loan.

[MomOfOneFunOne]

To reply to your op, no unless you wanted to charge interest and then hold it as a gift at the end of the loan. My mom did that once w/ my husband and school money. When we were in college we borrowed some school funds from my mom. She said there'd be interest but "not too awful much." When my husband had pd her back she gave him the chunk of interest. It might seem counter intuitive but it was nice to get a nice little chunk of cash when we could really use it.

 

To answer your second post . . . I thought you said it was b/t your mil and you/dh not his brother. Nunna his bee's wax.

[5kidsforME]

No. I think that making money off of your children is....tacky and greedy.

[Plucky]

I (thru my dh) borrowed $4500 from mother-in-law to make up the shortfall for ds's college tuition. We didn't make any arrangement for how much I'd pay back each month, but I've been sending $1000 because I'd like the debt *gone*. I have $1500 left to pay, and one of my dh's brothers has now mentioned that I need to pay interest. I think it's fair for me to pay interest in theory, but since I wasn't aware the loan came with "terms", I admit to being slightly disgruntled (even though I *know I shouldn't be*). Because I don't have a credit card, and I don't borrow money under ordinary circumstances, I have no idea what is a fair amount of interest to pay. :confused:

 

Why does your bil even know?

[Mejane]

No, I wouldn't - not for that short of a period of time.

 

:iagree:

[EarleneW]

No.

[Crissy]

To answer your second post . . . I thought you said it was b/t your mil and you/dh not his brother. Nunna his bee's wax.

 

 

 

:iagree:

Unless he was asked to speak on behalf of your MIL on the matter, or if the request came directly from her I wouldn't concern myself with his opinion.

[Kim in Appalachia]

Your BIL should stay out of it. It's none of his business. You don't need to listen to him. If your MIL said she wanted interest, then it would be different, but why should he have a say?

[Denisemomof4]

no - I wouldn't. JMO....

[Tabrett]

I would have given them the money in the fist place, as long as they had previosuly shown themselves to be responisble and thoughtful. Going along with the 'plenty of money' theme, If the money went towards fixing a roof, or music lessons etc for granchildren, I would have written a check directly to the contractor/program, in fact.

 

I really hope the economy rebounds and our investments mean something someday, because nothing will give me greater pleasure than helping my kids and grandchildren enrich their lives.

 

:iagree:

[JennyD]

No, I wouldn't charge interest, and this is none of your BIL's business. (As someone else asked, why does he even know?)

[Plucky]

I (thru my dh) borrowed $4500 from mother-in-law to make up the shortfall for ds's college tuition. We didn't make any arrangement for how much I'd pay back each month, but I've been sending $1000 because I'd like the debt *gone*. I have $1500 left to pay, and one of my dh's brothers has now mentioned that I need to pay interest. I think it's fair for me to pay interest in theory, but since I wasn't aware the loan came with "terms", I admit to being slightly disgruntled (even though I *know I shouldn't be*). Because I don't have a credit card, and I don't borrow money under ordinary circumstances, I have no idea what is a fair amount of interest to pay. :confused:

 

No, I wouldn't. I would take note that when your bil wants to borrow money from you or another family member that he will prefer to pay interest. :lol::lol::lol:

[nono]

I (thru my dh) borrowed $4500 from mother-in-law to make up the shortfall for ds's college tuition. We didn't make any arrangement for how much I'd pay back each month, but I've been sending $1000 because I'd like the debt *gone*. I have $1500 left to pay, and one of my dh's brothers has now mentioned that I need to pay interest. I think it's fair for me to pay interest in theory, but since I wasn't aware the loan came with "terms", I admit to being slightly disgruntled (even though I *know I shouldn't be*). Because I don't have a credit card, and I don't borrow money under ordinary circumstances, I have no idea what is a fair amount of interest to pay. :confused:

 

Wait a minute. This is between your dh, you and your MIL. How did dBIL get involved? :confused:

 

Gee, a fair rate? How does one determine that?? A savings account or CD right now isn't paying much, but then again, if you went and got an unsecured loan on your own, the rate would be much higher than current mortgage rates. OK, I'll pick a number that in my head seems "fair" for friends and family -- 5%... So if I'm reading your post right, you borrowed $4,500, and will have paid it back within 5 months. That would equal about $4,555 or $55 in additional interest at 5%.

 

Also, here's a link which shows today's averages for unsecured loans.

Edited November 15, 2010 by nono

[Julie in CA]

To answer your second post . . . I thought you said it was b/t your mil and you/dh not his brother. Nunna his bee's wax.

Well, it's a bit complicated. My dh is one of seven brothers. His dad passed away a few years ago, and some of dh's brothers had business loans from dad. Some things passed thru into some sort of a trust (?), and the brothers as a whole oversee the assets for mom. I'm not business-savvy, so I don't really understand it at all. As part of the trust, the brothers monitor the loans that are out, and those loans do have some interest attached. I just didn't realize that my piddly little loan wasn't just a private loan from mom, but that it would be viewed as part of her/the trust's assets/liabilities in the same way that the business loans were. The business loans (agriculture/farming loans) tend to be in the hundreds of thousands range, and I didn't realize mine would be in the same category. {sigh} I don't know how much interest is fair on $4500 paid back over 4.5 months.

[Unicorn.]

You should pay her what she would have gotten from interest had she left it in the bank. So if the going rate is 1%, then pay her at least 1%. 1.5 or 2% if you want to add a small thank you.

[LND1218]

I wouldn't charge interest.

 

I would give the money.

 

It's not of your BIL's business. (ETA - I see now that it could be.)

 

And interest on a 4 or 5 month loan wouldn't be much at all!

 

But to answer your interest question. My dh says at 6% on a 5 month loan of $4500 the interest would be just under $68.00.

 

So a lower or higher interest rate will of course change this amount.... I would annoyed that they didn't discuss it up front. I wouldn't likely volunteer to pay it.

[Murphy101]

Well, it's a bit complicated. My dh is one of seven brothers. His dad passed away a few years ago, and some of dh's brothers had business loans from dad. Some things passed thru into some sort of a trust (?), and the brothers as a whole oversee the assets for mom. I'm not business-savvy, so I don't really understand it at all. As part of the trust, the brothers monitor the loans that are out, and those loans do have some interest attached. I just didn't realize that my piddly little loan wasn't just a private loan from mom, but that it would be viewed as part of her/the trust's assets/liabilities in the same way that the business loans were. The business loans (agriculture/farming loans) tend to be in the hundreds of thousands range, and I didn't realize mine would be in the same category. {sigh} I don't know how much interest is fair on $4500 paid back over 4.5 months.

 

No it's not complicated. Your mil loaned you the funds directly, not via the trust, so the trust does not dictate your personal agreement with her. They need to mind their own business. If the loan were officially directly from the trust, paperwork would have been a legal requirement for the trustees to disperse the loan. It was not so it is not. The end. Unless the brothers are running some shady trustee goings on, in which case their crooked self can go ... Get more crooked.:)

 

Trustees manage the fund. That does not mean that your mil has no voice in how her own funds are used.

[Gwenhwyfar]

Assuming you had plenty of money, and you loaned your adult child $4500, and they paid back $1000 a month, every month, on time, would you charge them interest? If so, how much?

 

(haven't read the thread yet)

 

absolutely not ~ i'm their mother, not a loan shark. :p

[Allearia]

I (thru my dh) borrowed $4500 from mother-in-law to make up the shortfall for ds's college tuition. We didn't make any arrangement for how much I'd pay back each month, but I've been sending $1000 because I'd like the debt *gone*. I have $1500 left to pay, and one of my dh's brothers has now mentioned that I need to pay interest. I think it's fair for me to pay interest in theory, but since I wasn't aware the loan came with "terms", I admit to being slightly disgruntled (even though I *know I shouldn't be*). Because I don't have a credit card, and I don't borrow money under ordinary circumstances, I have no idea what is a fair amount of interest to pay. :confused:

 

I would say with that rate of re-payment there won't be much interest. It will be very quickly repaid. If your mil decided to charge interest that would be one thing, but why is bil suddenly butting in unless he takes care of mil's finances?

 

I recently borrowed around $1000 from my mother and paid it back when I could, and it did occur to me to add interest but my mom did not seem concerned or worried at all about it, and I thought she might actually be insulted. I think a nice thank you gift or flowers when it is paid off might be good to make sure she knows how much you appreciate it.

[Ester Maria]

My hope in humanity dies a little bit every time I read "financial interest" and "family" in the same sentence. It completely escapes me, I cannot fathom it, how could somebody seek to financially profit out of their children's bad financial situation which made them seek for help in the first place.

It doesn't matter if it's $10 or $10k, if it's going to be repayed within three day or three years, as long as the date is respected. If you have the money to help, just help, without expecting personal gain in it. I just really despise this whole "what's in it for me?" way of thinking when it comes to YOUR OWN FAMILY or closest friends.

 

I would also not assume somebody is looking for an interest unless specified. If specified, I'd probably write that person off and not borrow any money from them in the first place. Family and friends should be reliable and be there for you in times when you need help rather than seek to exploit your struggles for their personal gain.

[Haiku]

No. If I loaned my adult children money it would be because I wanted to help them out, not because I wanted to make a buck or teach them a lesson about responsibility.

 

Tara

[LibraryLover]

nm

Edited November 16, 2010 by LibraryLover

[nono]

My hope in humanity dies a little bit every time I read "financial interest" and "family" in the same sentence. It completely escapes me, I cannot fathom it, how could somebody seek to financially profit out of their children's bad financial situation which made them seek for help in the first place.

It doesn't matter if it's $10 or $10k, if it's going to be repayed within three day or three years, as long as the date is respected. If you have the money to help, just help, without expecting personal gain in it. I just really despise this whole "what's in it for me?" way of thinking when it comes to YOUR OWN FAMILY or closest friends.

 

I would also not assume somebody is looking for an interest unless specified. If specified, I'd probably write that person off and not borrow any money from them in the first place. Family and friends should be reliable and be there for you in times when you need help rather than seek to exploit your struggles for their personal gain.

 

Hmmmm. I don't know if your hope should die a bit. I know entire networks of individuals who further their businesses and personal interests by private loans, outside the banking system. They only involve family and close friends, because who else can we verify would be that reliable, as you note?

 

They are win/win situations as the lender gets better rates than a bank would give, and the borrower gets better rates than a bank would give. Both sides benefit. And if someone is in a dire situation, well the lender can always simply forgive an existing loan or offer a gift. I've seen that happen several times in my life so far.

[Julie in CA]

I wouldn't charge interest.

 

I would give the money.

 

It's not of your BIL's business. (ETA - I see now that it could be.)

 

And interest on a 4 or 5 month loan wouldn't be much at all!

 

But to answer your interest question. My dh says at 6% on a 5 month loan of $4500 the interest would be just under $68.00.

 

So a lower or higher interest rate will of course change this amount.... I would annoyed that they didn't discuss it up front. I wouldn't likely volunteer to pay it.

Okay...so...{deep breath}, I have to borrow another $4500 to pay the second semester. Mother-in-law knew this, and was fine with it. I have a credit card, I just don't use it because the interest rate is too high. I'm wondering though, instead of borrowing from mil again, is there a reason I should not just apply for a credit card that has 0% interest for the first year, pay the charges off the credit card at the same rate as I am now (within 5 months), and then I not only won't be paying interest, but I won't have the brothers involved?

[Lolosoli]

No. I would NOT charge interest for any reason.

[Murphy101]

Okay...so...{deep breath}, I have to borrow another $4500 to pay the second semester. Mother-in-law knew this, and was fine with it. I have a credit card, I just don't use it because the interest rate is too high. I'm wondering though, instead of borrowing from mil again, is there a reason I should not just apply for a credit card that has 0% interest for the first year, pay the charges off the credit card at the same rate as I am now (within 5 months), and then I not only won't be paying interest, but I won't have the brothers involved?

 

Have you mentioned the brothers involvement to your MIL? What does she say about it? It could be that they are abusing their position as trustees and overstepping? She might actually be very angry to hear of them doing this.

 

I wouldn't want a family feud, but it really sounds like they either think you are taking advantage of her or they are. She needs to know.

 

I would avoid the credit card if possible and if you can feel okay with the clear understanding you have with MIL. In fact, you might mention to MIL and BIL that it doesn't make sense to pay her interest when you can get a credit card sans interests. You are simply trying to avoid messing with your credit.

[C_l_e_0..Q_c]

The couple of times my Dad lent us money, he did charge us interest. In short, he was taking money out of a placement, and was losing interest on it. We had to cover his losses. It makes sense to me. Why should he lose money for helping us out?

 

Is your MIL losing money on that loan to you? Or was it in the bank doing nothing?

[Ali in OR]

Wow. I would not have a problem paying a little interest for the privilege of borrowing money so easily. Especially if I might need to do so again in the future. My dad put 4 kids through college. Grad school was up to us. I borrowed I think about $5k from his retirement account. I was PROUD to make my payment with interest every month. I was a grown-up, with a teaching job, and was very thankful that his loan helped me pay for my graduate degree and teaching credential. I believe that I paid a rate that was below what I could borrow elsewhere, but still more than he might get from investing it in a bank or CD, etc. If the interest would really only be $50-$60, it's just not even worth agonizing over. That's the cost of borrowing money. And it helps take care of a family member--better than interest going to a bank.

 

I made payments that covered about half of the loan and my dad then forgave the balance when I got married. Oh, and here's how my kids make money. They have cash reserves in their bedroom. When I am short on cash, I borrow from them. I write an I.O.U. If I borrow $20, I pay them back $21 as soon as possible. They are learning about how interest works. And sometimes it's just more convenient to borrow from them than find an ATM. Works well for all of us.

[Murphy101]

I actually have no issue with paying interest.

 

The point is, that wasn't the agreement she and her mil came to. Interest was never discussed.

[QueenCat]

I (thru my dh) borrowed $4500 from mother-in-law to make up the shortfall for ds's college tuition. We didn't make any arrangement for how much I'd pay back each month, but I've been sending $1000 because I'd like the debt *gone*. I have $1500 left to pay, and one of my dh's brothers has now mentioned that I need to pay interest. I think it's fair for me to pay interest in theory, but since I wasn't aware the loan came with "terms", I admit to being slightly disgruntled (even though I *know I shouldn't be*). Because I don't have a credit card, and I don't borrow money under ordinary circumstances, I have no idea what is a fair amount of interest to pay. :confused:

 

Is he speaking for your mil? If she hasn't asked for interest, don't fret. It really isn't any of dh's brother's problem, unless mil asked him to talk to you. Take her out for lunch sometime, do something nice, but don't worry about the interest unless she asks for it.

[ChrisB]

No, I wouldn't - not for that short of a period of time.

:iagree:

[ChrisB]

I actually have no issue with paying interest.

 

The point is, that wasn't the agreement she and her mil came to. Interest was never discussed.

:iagree:and this.

[clementine]

I'd really only want to pay the amount she'd be losing from the bank. We are earning SO little in interest right now, the amount would be teeny anyway.