[USER]

Hello everyone. While this is not FIRE related I am coming to you as you are financially savvy, hopefully reasonable people and this is creating a huge argument within family members!

I will use a small amount to make it simpler however this is a large loan.

Say you let someone borrow $1000 from your line of credit.

It took them a month to pay it back and within that month the Bank automatically took $50 from your account for the minimum payment.

Then charged interest on the line of credit.

When the person returns the funds do you expect the person to pay
A. $1000 initial loan + interest

B. $1000 initial loan + $50 minimum payment + interest

C. $1000 initial loan only

This is very common sense to me but please thoughts !

[Priscilla]

It’s a lot more complex than that especially if it’s a credit card which you also carried a balance on.

I’d say I would want the initial loan + whatever interest agreement you made.

If it wasn’t previously discussed then take as lesson learned

[Tweetie]

My thoughts: you need to find out exactly when your statement end date is.

This way your client (the person you are loaning money to) has at least a full 30 days before a payment is due.

If I was borrowing money I would expect to pay an application fee, interest and original borrowed amount

[Sam]

They pay:
The principal, $1,000
The interest, whatever bank charged you

The risk premium, the amount you earn for possibly not being paid back
So, assuming 4% interest

$1,000 Principal
$3.33 Bank Interest
$100 Your margin
=
$1,103.33

[Tweetie]

Here is how a credit card work, which should be similar to a line of credit.

There is a statement cycle begin date and cycle end date and payment due date.

Now let’s insert some numbers:
Cycle start date: 11th
Cycle end date:10th
Due date: 8th

Anything that is charged between ‘March’ 11th to ‘April’ 10th will be due on ‘May’ 8th. As long as the balance is paid in FULL, no interest will be charged.

…anyone who knows how this work is going to fight you tooth & nail if they haven’t had the “loan” with you at least a month and you are trying to make them pay extra.

That $50 payment the bank took was likely for a balance you already had with them previous to this “loan” you got into with this other person.

[Jenn]

The question is what did you two agree to?
And never loan anyone money you can’t afford to lose.

[Author]

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