Sister-in-law needs money on a short term basis just a few thousand dollars. I have a rule for anything over $1000 either needs a basic contract.
So I offered a loan with what I consider to be rather favorable terms: 15 year amortization schedule, 12%, lender can call for a balloon payment at the 60 month mark, no payments or interest for the first six months.
She responded with an unwillingness to sign an agreement and that I should simply lend the money because she is good for it. She also mentioned to my wife that she doesn’t like the idea that I’m trying to make money off of her.
I felt that my offer was extremely fair and she had indicated an ability to pay the entire thing back in February so in my mind offering six months of no interest and no payments is materially aligned with her desires (and specifically, I’m not making any money off of the deal, if full repayment in February were to happen).
I have been witness to friends and family loans turning into absolute disasters, which is why (for me) anything under 1000 is always just a gift from my point of view and over 1000 gets a basic agreement so that expectations are clear and both parties are protected.
It’s important to note that she did not cast any dispersions or say anything negative to me, but I definitely kind of felt like an asshole because her expectation was that I would just spot the cash with no type of agreement.
At the same time, I don’t appreciate the communication to my wife that I am trying to make money off of her. At the end of the day, I’m more than happy to float whatever they need for six months but if circumstances change and I have cash locked up in something that doesn’t pay any interest, for all intents and purposes, due to inflation, I am going to be perpetually paying a price beyond the initial loan amount.
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Sister-in-law needs money on a short term basis just a few thousand dollars. I have a rule for anything over $1000 either needs a basic contract.
So I offered a loan with what I consider to be rather favorable terms: 15 year amortization schedule, 12%, lender can call for a balloon payment at the 60 month mark, no payments or interest for the first six months.
She responded with an unwillingness to sign an agreement and that I should simply lend the money because she is good for it. She also mentioned to my wife that she doesn’t like the idea that I’m trying to make money off of her.
I felt that my offer was extremely fair and she had indicated an ability to pay the entire thing back in February so in my mind offering six months of no interest and no payments is materially aligned with her desires (and specifically, I’m not making any money off of the deal, if full repayment in February were to happen).
I have been witness to friends and family loans turning into absolute disasters, which is why (for me) anything under 1000 is always just a gift from my point of view and over 1000 gets a basic agreement so that expectations are clear and both parties are protected.
It’s important to note that she did not cast any dispersions or say anything negative to me, but I definitely kind of felt like an asshole because her expectation was that I would just spot the cash with no type of agreement.
At the same time, I don’t appreciate the communication to my wife that I am trying to make money off of her. At the end of the day, I’m more than happy to float whatever they need for six months but if circumstances change and I have cash locked up in something that doesn’t pay any interest, for all intents and purposes, due to inflation, I am going to be perpetually paying a price beyond the initial loan amount.
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OP has offered the following explanation for why they think they might be the asshole:
> 1: I insisted on the contract for a family loan
2:  family members explicit expectation is that I should lend money without a contract and also said to my wife that I am “just trying to make money off of her”
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Contest mode is 1.5 hours long on this post.
Nta
Your terms are reasonable and fair and she doesn’t have to take the offer.
NTA. If she is “good for it” as she says then you won’t make any money from it – she’ll pay you back within the specified period. Her protests make me think she either intends to take her sweet time repaying or to not pay you back at all. You are wise to protect your interests, family or not.
NTA.
As you say, without an agreement, it may as well be a gift.
But her reaction isn’t surprising to me. Two of my friends (a pair of cousins) had a friend they’d known for 20 years who was buying her first house. Suddenly a load of extra fees she hadn’t budgeted for appeared. Like ten, twelve grand of fees.
She didn’t have the money and was gonna have to incur fees to adjust her mortgage to cover them (not sure of the exact details, I got it second hand). So they offered to lend her it. She was all grateful and happy.
Until they said “can we just do this basic agreement” (even more basic than yours – basically a “we are loaning you 12k, you will repay it within 5 years”, no interest or anything. Just literally something to document that it’s a loan and she’d repay it.
She got utterly insulted, turned completely toxic and ended their friendship over it. 20 years friendship ended because she wouldn’t sign a bit of paper saying she’d do what she already said she was going to do. Something to do with not trusting her after all these years and being insulting and (somehow) dehumanising her.
NTA but how much is she asking for that it will take 15 years to pay back? I lent a ton of money to my sister and have never gotten it back. I am fairly bitter about it still.
You’re not the asshole here. Asking for a simple agreement on a loan especially over $1,000is completely reasonable. It’s not about making money off her, it’s about protecting both sides and making expectations clear.
Offering six months with no payments or interest is already extremely generous. If she’s uncomfortable signing, that’s her choice, but it doesn’t make you wrong for wanting to do things safely and fairly.
NTA
An agreement should be in place if you are lending money. Her insistence on not having one will only lead to issues for you.
With that said the terms of you lending the money could be up for debate. Having a balloon payment, 12% interest etc could be seen as aggressive for a family member. 12% is on the higher end for a loan. So is it fair she felt you were trying to make money off her… ehhhhhh I dunno
Yet she could always go and get a line of credit if she not happy with your terms. If that’s possible for her.
NTA. I once started a business and took out a small loan from my dad (An actual small loan, $10,000 USD). I stated I would pay him interest and created a repayment plan. It was completely my idea so both of use would feel comfortable with it (I didn’t like the idea of a looming unpaid debt with my dad, I would have felt like a jerk). There is nothing wrong with this.
I had another relative ask for a few thousand USD. They said they would pay it back, but I knew they couldn’t. In that case I decided just to give them the money on the condition they never mention where the money came from. I didn’t want to have to ruin the relationship with a situation where they would always feel bad about a debt they could not repay every time they saw me.
The upshot is you are doing them a favor. Just like my dad did for me, and I did for another relative. The conditions were completely different and each reflected the sensibilities of both people involved. It is your money and it is completely up to you the conditions under which you release it. If a family member wants that money they can either take the deal or look elsewhere.
You are under no obligation to give it under terms you are not comfortable with and they are under no obligation to take it. It sounds like you understand that and SiL does not. Her reaction makes me think that SiL likely would not have paid the money back.
NTA, a contract makes sense as a safety net for that high amount, but I wouldn’t charge interest from people I care about… unless it’s for a business, then the business pays the interest.
Just don’t lend her anything. She can get a loan from a bank.
INFO: What input does your wife get on finances?
If your wife wasn’t relevant (you were single or it was your side of the family), I’d stay N T A for not wanting to loan/gift the money but softly Y T A for your approach. A written contract wouldn’t stop a loan from turning into a disaster. It means you are more likely to get your money back, but doesn’t prevent family drama (like there is now) or drama later if you do sign and it doesn’t go through.
IMO a better rule is just any amount is a gift, and if you aren’t willing to gift that amount that then don’t gift/loan etc it. But your approach does really seem like you are making money from your family.
You may not view it as trying to make money off of them, but you are being very mercenary about it. Like yes if she paid you back in 6 months you’d be out the interest, but most people would vie that as just doing a favor for close family. Like assuming you are loaning $10,000 dollars and a VERY aggressive interest rate of 5% (at least for anything risk free like a FDIC bank) for 6 months- that means you’d lose out on less than 300 dollars. So talking about a 15 year amortization schedule and 12% interest rate is 1. not coming across as just doing family a favor and 2. sort of makes doubtful your claim of just wanting to not lose out from inflation/not earning interest.
Do you really want to be a money lender of your close family chasing them up on installments or interest payments? Is that what you want your relationship to be? That is why I would say Y T A.