What is a fair cost of capital right now on a friendly loan?

HarryCaray · Apr 27, 2009

I have been asked by a friend to loan him about 4k. He lost his job and is having trouble staying afloat right now.

I know this guy will pay me back and it's not about the money, but he insists on paying me a fair interest rate. I never look at my bank statements and have no idea what my money is making in the bank, but that's what I was going to charge him. I don't want to charge him at all but he insists.

What would be a fair rate to charge him? Keep in mind I am not trying to recover what he would pay to fund a personal loan, just approx. what my money is making in the bank.

What's a fair rate? 2%? 3%? 5%? I have no idea...

G.MONEY · Apr 27, 2009

1/2 under prime would be fair

kidman232 · Apr 27, 2009

charge him like $5 a week till he pays it off

Buster · Apr 27, 2009

fair for what an unsecured bank loan for a customer with great credit history is 12% right now....how do i know? just got one for 4k last week 166.00 a month for 24 months...did it to prove to a friend that banks were loaning money...he claimed they were not and i walked into my bank and 15 minutes later walked out with the cash...

SportsAlmanac2000 · Apr 27, 2009

Buster said:
did it to prove to a friend that banks were loaning money...he claimed they were not and i walked into my bank and 15 minutes later walked out with the cash...

Yeah, that's why you did it. :laugh:

Buster · Apr 27, 2009

Sports Almanac 2000 said:
Yeah, that's why you did it.

ok it was really for anal bleaching...

cocktailsnlongshots+ · Apr 27, 2009

$120 a week til it's all paid

nhoj · Apr 27, 2009

$120 and go up 20% if he is 10 days late. If you need some muscle I am sure you can ask Whale to help you out for a small fee or a couple of them cookies he is always munching on.

ensign_lee · Apr 28, 2009

IF you're just doing it as a favor and he insists on paying you interest, just charge him 5% annually. That's much less than he would get as a personal loan from the bank and it's higher than you'd be making in the bank "risk free", for the most part.

The highest rewards checking account around is in a bank in Alabama giving 5.75%, so that seems pretty reasonable for both sides involved considering you want to do him a favor and he insists on paying interest.

jesse1111 · Apr 28, 2009

10%. If he wants 4000 charge him 4400 when he pays it back whenever it might be and be done with it.

nhoj · Apr 28, 2009

never loan friends money!!!!

hippieki11er · Apr 28, 2009

Buster said:
fair for what an unsecured bank loan for a customer with great credit history is 12% right now....how do i know? just got one for 4k last week 166.00 a month for 24 months...did it to prove to a friend that banks were loaning money...he claimed they were not and i walked into my bank and 15 minutes later walked out with the cash...

Interesting and good to hear. You gonna just pay the thing off within 30 days then?

HarryCaray · Apr 28, 2009

nhoj said:
never loan friends money!!!!

It's my brother. Trust me, he will pay me back.

Settled on 5%, he will pay back $4,100 within 6 months.

bellyputter · Apr 28, 2009

I have been burned so many times in my life, there are very few people left that I would loan money to. Don't charge your own brother interest, just have him take you out to dinner.

whalewager · Apr 28, 2009

Flat 10 percent is a good payback.

randyrohm · Apr 29, 2009

I made a great loan a year and a half ago. My best friend needed 20K to move into his dream house with his new bride. I took it out of the market and he has to pay me 23K when 2 years are up. He has a divorce settlement he has to wait on that will give him a couple hundred K. He couldnt be where he is without me and I would have lost a lot of that $. We both won.

HarryCaray · Apr 29, 2009

5% agreed-upon. I will not make any significant money off the loan, but the point is that money is not FREE.

Thanks for the responses.

What is a fair cost of capital right now on a friendly loan?

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