Question: We recently discovered that one member of the family, to everyone’s > > surprise, owes another a fairly large chunk of money (over $10k) from > > about five years back. Personally, I have strong feelings about who > > is to blame for this situation, but I’d like to keep that out of this > > discussion. > > This wasn’t a pre-arranged loan, so an interest rate was never > > established. (Ordinarily interest wouldn’t be an issue within family, > > but these two don’t get along very well.) We’re trying to figure out > > what the fairest interest rate would be.
> > Some people are saying savings account interest rate, which is awfully > > low. Others say that the rate should be the same as that given by the > > fund the “borrower” has been keeping money in. Any ideas?
> > Thanks.
Answer: First off, what is the likelihood of even the principal being paid off after > five years? The borrower, if he has made no effort to repay at this late > juncture is likely to think of the money as ‘his’ by now. Seems like the > lender needs to chalk this one up to experience as far as any past interest > is concerned and write up a loan agreement as if the loan was just now made, > coming up with an interest rate and payback schedule (assuming a lump-sum > repayment will not be forthcoming) starting now. Good luck on this, though.-
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