Berlin / Bremen Whether it’s a faulty smartphone or a hefty backlog for ancillary expenses – some expenses can put a strain on your budget compared to what you planned. Should parents or siblings cover the costs?
One has it, the other needs it: within your own family, you sometimes help each other. For example when it comes to money. But even in the close circle of relatives, it’s important to make sure a loan doesn’t end up being a disappointment. Two experts explain how it works.
What should you consider when renting?
“From a legal point of view, lending money is usually a loan agreement,” says lawyer Johanna Mathäser. This means that the borrowed money must be repaid by the agreed deadline at the latest.
Before such a deal is made, however, lenders should definitely think about the general terms of the loan, advises Mathäser.
For example: what is financed with money? How close is the family member to you? How serious is the loss of money if the borrower cannot repay the money? What impact could it have on people? Should interest be agreed for the loan transaction? Would a bank finance the project?
Once the foundation is laid, the question remains: what is the best way to deliver the money? Ideally by bank transfer, says Mathäser. That is, with the purpose of the loan, “so that there is no doubt about the borrower’s repayment obligation,” says the lawyer.
If you want to deliver the money in cash, you should at least have the receipt confirmed by the signature, says Annabel Oelmann, director of the consumer advice center in Bremen.
Should you contractually guarantee the loan?
“Absolutely,” says Oelmann. In this way, ambiguities between the parties are avoided. Furthermore, a written agreement can be traced back at any time, for example in the event that something should happen to one of the parties, says Mathäser.
What must be in the contract?
The content of the contract can be freely determined by the parties. At least it makes sense to regulate the amount, exact repayment date and interest, says Mathäser. Also, if the money has to be repaid in one go or in installments.
If higher amounts are involved, the object of the guarantee can also be registered contractually, says consumer lawyer Oelmann. The contract also includes the names and addresses of both parties. “Then they both sign it,” Oelmann says.
From what amount is a loan not recommended?
“There is no absolute sum for this,” says Mathäser. “It is important that the lender does not take unnecessary risks.” The amount should be fairly easy to absorb and dispensable. “You should refrain from such a deal at the latest when the required amount is painful,” advises the lawyer.
Also, the amount depends on the purpose, Oelmann says. “If someone asks for 500 euros for their vacation, I say no on principle.” Because that could mean that someone is fundamentally unable to save. The situation is different with unplanned burdens, for example when a family member wants to allow their child to spend a semester abroad. “Then you are united as a family,” says Oelmann.
According to Mathäser, if an adequate guarantee has been agreed, higher loan amounts could also be considered. However, the lawyer therefore recommends obtaining legal advice and having the contract drawn up by a lawyer.
How long does the repayment time make sense?
“You can’t even give a general answer to that,” says Oelmann. It all depends on the amount borrowed. Lawyer Johanna Mathäser advises against long terms.
Should you agree on an interest rate?
“I wouldn’t think of charging interest for a shit or 100 or 200 euros,” says Annabel Oelmann. “But if it goes beyond a certain amount and period of time, the interest is obviously justified.”
The level of interest should at least be based on the performance of a call money account, advises Oelmann. According to “Finanztest” magazine (4/2022), the most profitable overnight interest rate is currently 0.2%.
So currently you only have to offer very little to be better than any phone money account, but still cheaper than any consumer or real estate loan, says Oelmann. And this is exactly the area of interest that can be of interest to both parties.
What if the money is not returned?
If the money doesn’t come back as agreed, the borrower should be kindly reminded of the payment, Oelmann says. If nothing happens, he advises: “Go to a lawyer”. If the borrower does not have assets that can be seized, court proceedings will bring little. Because then the money went when in doubt.
Are there any differences in the loan between friends?
“Families are more forgiving when things go wrong,” says consumer advocate Oelmann. He advises to stay away from lending business to friends. If friends need money, it’s best to refer them to their families instead. “Because friendship often ends with money.”
Attention: “Loan agreements within the family can have an impact on any inheritance disputes,” says lawyer Mathäser. In the case of zero-interest loans, for example, one should ask oneself whether it is actually a gift.
© dpa-infocom, dpa: 220421-99-992131 / 2