Should I Do This? [borrow from relative to pay off loan]

Questions on how we spend our money and our time - consumer goods and services, home and vehicle, leisure and recreational activities
denovo
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Re: Should I Do This? [borrow from relative to pay off loan]

Post by denovo » Tue Aug 14, 2018 2:44 am

dm200 wrote:
Mon Aug 13, 2018 2:49 pm
Wonder if any folks have a "war story" on this topic - from either direction?
There have been some good long threads on this

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MossySF
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Re: Should I Do This? [borrow from relative to pay off loan]

Post by MossySF » Tue Aug 14, 2018 3:18 am

My only suggestion if you take the loan -- absolutely no unnecessary spending until the loan is repaid. Even if it's "necessary" but it's flashy and everybody will know you just spent lots of money, don't do it.

There's nothing that irritates family/friend more than first helping somebody in financial "trouble" and then seeing them with new $1000 iPhone or going on an international vacation before the loan is repaid. Money is fungible so the lender feels they just subsidized free spending lifestyle -- so they feel like a sucker for believing the sob story.

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dm200
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Re: Should I Do This? [borrow from relative to pay off loan]

Post by dm200 » Tue Aug 14, 2018 10:27 am

MossySF wrote:
Tue Aug 14, 2018 3:18 am
My only suggestion if you take the loan -- absolutely no unnecessary spending until the loan is repaid. Even if it's "necessary" but it's flashy and everybody will know you just spent lots of money, don't do it.

There's nothing that irritates family/friend more than first helping somebody in financial "trouble" and then seeing them with new $1000 iPhone or going on an international vacation before the loan is repaid. Money is fungible so the lender feels they just subsidized free spending lifestyle -- so they feel like a sucker for believing the sob story.
If you do borrow anything from a relative, keep the terms of repayment - or early. BUT I would keep 1 or 2 months cash in reserve so you can always make the monthly payments as agreed.

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Meg77
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Re: Should I Do This? [borrow from relative to pay off loan]

Post by Meg77 » Tue Aug 14, 2018 10:32 am

redbeard25 wrote:
Mon Aug 13, 2018 6:07 am
You raise a good point and I will say, this obviously was a bad place to put my money...but a mistake I've learned from. The only way I see this relationship going sour is if I don't pay him...and I've been making payment's with no issues. Let's just say the money isn't an issue for him...
If I sell my car I'll only get at least 12k...leaving me with the additional loan to pay off $3-5k or so. Pay off in less than a year.
I go buy a toyota/honda for $2500 but run the risk of well..many things could go wrong as I've experienced in the past.
Just considering options but buying a cheap car is more of a risk imo
Just want to let you know that I'm a millionaire with a 6 figure income, and I drive a car worth less than yours (about $11k.) It's a 2011 Volvo XC60 with 50,000 miles in good condition. Cars are built well these days, and there is no reason you can't downgrade to a $7k or $8k car and still have a perfectly reliable (and even attractive and comfortable) car.

Take the relative's offer, pay off your loan, and consider downgrading if you have other debt you need to pay off too. If not, just keep it if this is your only debt. But make the payments on time every time no matter what happens, and try to pay the relative back early if possible. This is a great offer that will save you a lot in interest. And don't worry about your credit - it's not going anywhere but up unless you have some new collection items or defaults in the near future.
Last edited by Meg77 on Tue Aug 14, 2018 3:31 pm, edited 1 time in total.
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mortfree
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Re: Should I Do This? [borrow from relative to pay off loan]

Post by mortfree » Tue Aug 14, 2018 10:45 am

If I gave someone money to pay for a specific car and then they turned around and sold it, I wouldn’t be happy about that. Even if I got my money sooner.

Kind of a bait and switch move.

YMMV as the usual disclaimer.

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corn18
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Re: Should I Do This? [borrow from relative to pay off loan]

Post by corn18 » Tue Aug 14, 2018 10:50 am

Might be worth looking at it from the lender’s POV. I am quick to help any of my family out if they need it. None have ever asked I have always offered. I treated as a gift and sometimes I got paid back, sometimes not.

If the relative wants to help becaus you helped them (which seems to be the case), take the help and make them proud by paying on time and not getting into more debt.

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