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jc4112

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Reply with quote  #1 

I have a friend who would like to borrow $5K from me, with a promise to pay back $8K after a month.  Now, I have never lent money to people/investors and wanted to know what security measures I should take in lending private money.  I always hear horror stories about people, even family and friends, who don't pay back.  Should I use a promissory note?  Collateral and contact info for family and friends, anything else?  Is this even a good idea? 

rlc

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Reply with quote  #2 
Just be prepared (in the worst case) to consider the loan a gift.
Subcranium

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Reply with quote  #3 
5k to 8k in a month? Something pathetic is happening there.
RonaldStarr

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Reply with quote  #4 

JC 112-------------------

 

I am not an attorney, but you might want to consult with one before to go forward with this proposed loan.

 

If you are in CA, that loan would be considered USURIOUS were it to be discussed in front of a judge, I believe.  When judges see such usurious loans they typically require that the lender accept zero percent interest to get their money back.

 

All of the the things you mention would be only the minimum level of action on your part.  You should have a copy of their driver's licence, I feel.  If the person has real estate you would get a personal note and then record in the recorders office of the county in which the property is located a deed of trust secured by the real estate.  If there is no real estate and they have a free and clear car, boat, or other valuable assets, you would have them give you the pink slip or whatever is the suitable way to put up the asset as collateral.

 

That seems like an extremely high loan interest rate to me.  Maybe 3% to 10% a month might make sense, but  60%?

 

And what is the source of the repayment money?  Is this person going to use that money to make a bigger profit than the money you are to get back?  If not, you likely should not be loaning the money.  If they are in a "tight" situation and desperately need the money, as it sounds given such a high interest rate, what is supposed to relieve the situation so they can pay you back?

 

It is one thing to help people out, it is another thing to help them out expecting to make outrage profit on it, it seems to me.

 

Write up the contract with what will happen if they don't pay back as agreed.  What additional money will they have to pay?  What actions can you take to attempt to recover your money?

 

You might suggest they borrow the money somewhere else.  Then you don't take the risk of never getting back the money.


Good Investigating*********Ron Starr************

 

BenJones

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Reply with quote  #5 

Even a monkey could get a credit card cash advance for a better rate than that.

nitedork

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Reply with quote  #6 

it may be a case of throwing good money after bad.

 

i would run, not walk from this situation

algorri

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Reply with quote  #7 

 

 Ive done lots of small  bridge loans and what Ive learned is that people that offer that much of a return on such a small loan amount do not have any real plans to pay it back. All they are interested in doing is getting the money and offering a 60% return they know some one would probably loan it to them.

 

For that small amount he could go to Check into cash. According to their TV commercials you can get up to $10,000 just for asking.

If you do decide to loan it to him get a promissory note and a signed and notarized deed to his house. Do your homework first on the property. comps, title, etc. For that small amount and for that short of time I would probably just ask for 5-10 points with no interest. That's fair. Like it was said in the movie... you can only ski behind one yacht at a time. 60% interest is out of the question.



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Reply with quote  #8 


"maybe a small bubble in tampa"

 

Easist way  legally is to have them write a check for the end amount ($8000)

 

And give them cash in an envelope.

 

If they don't pay go after them for a felony bad check.

 

If your gut says no, They aint gonna pay, follow your inner self, and say no.

No is probably the most important business word to learn....then follow the  next qoute...

 

Will Rogers..." the easiest way to double your money is to fold it in half and put it back in your pocket"

 

Ps. :    at least during all this real estate turmoil, we're all posting close to the beach, in the mountains, or at least warm...

 

 

Time for another Crown Royal Reserve...just my .02

 

 

Cheers!!!

Jeff

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Reply with quote  #9 
Quote:
Originally Posted by nobubbleintampa

Time for another Crown Royal Reserve...just my .02

 

Cheers!!!

Your tastes are too expensive for me...I'll stick to my Jose Cuervo...

 

More cheers!


__________________
Please God, make the second million easier...
jc4112

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Reply with quote  #10 

Thanks everyone for your responses.  I've changed my mind!

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