Have you ever borrowed money from relatives or friends?

[NW-Bound]

This is the flip side of another thread regarding loaning money to relatives and friends.

I just recalled that we DID borrow money from a friend of my wife's family when we bought our first home. In 1980, just 4 months into my first good-paying job, we wanted to buy a 1800-s.f. 4-bedroom home. The FHA mortgage interest was 14%, and that just killed home prices. So, there were good deals to be had.

We borrowed a few thousand dollars (don't remember how much) from a long-time friend of my wife's family, with the intention of repaying ASAP. No interest was offered nor asked. No paper was signed. As my wife arranged for this loan, I did not know if she asked or the man made the offer, knowing that we would be a bit tight.

We scrimped for the next few months, and paid it off ASAP, as we promised. Other than a bed and two bar stools so we could eat at the kitchen counter, we would not buy any furniture until this debt was paid off. This generous man even offered for us to consider it as a gift, and not having to pay it, but we absolutely declined.

Yes, we still see each other from time to time.

PS. We never have to borrow money from friends or relatives since. In fact, ever since they stopped the interest deduction for consumer loans, we started to pay cash for cars.

 

[ziggy29]

Nope, never. My parents gave me a couple of "gifts" when I was starting out and when I bought my first home, and my mom occasionally sends gifts to her kids now for estate planning purposes, but no loans.

 

[kaudrey]

Yes, my parents loaned me money to buy my first car, just out of college. Since I didn't have much of a credit history at that point, they gave me a better rate than I could get at the bank (they gave me their current CD rate). I repaid it in monthly installments over 5 years, just like I would have a bank loan. We didn't draw up any papers, but kept a spreadsheet with the amortization schedule and the payments made.

My sister and her husband went to the "bank of mom and dad" when they needed a bridge loan between selling one house and buying another, which they repaid as soon as their first house sold.

We have a small family and we all are fiscally responsible, so these kinds of things were never a concern for any of us.

 

[FIREd]

I borrowed a few thousand dollars from my dad when I started graduate school. I expected a scholarship but the money took longer than expected to arrive and I needed a lump sum to pay for the move (abroad), tuition and books for the first semester, security deposits, etc... Repaid everything in full a few months later when I (finally) received the scholarship money.

That was the first and last time. DW never borrowed money form her parents.

 

[travelover]

Never. Well actually I did borrow $2000 from DW for one week. I was buying a new car using a HELOC and the [-]incompetent[/-] thorough credit union was so slow that I got impatient and bought it cash - with DW's $2K.

 

[W2R]

Never.

I have never lent money to relatives or to friends, either. *

My family values initiative and independence very highly. None of us would dream of asking family for money when we are perfectly capable of working and earning it ourselves. I have never asked for money, not even one cent, nor have I ever been asked for money. That's not us.

* (other than $5 to a co-worker who forgot her lunch)

 

[easysurfer]

I've never borrowed from friends, relatives. But have done my share of lending -- with good and bad results

Like W2R, I value my initiative and independence highly and wish others did as much.

 

[rescueme]

"Neither a borrower nor a lender be".

- William Shakespeare (Me too )

 

[W2R]

"Neither a borrower nor a lender be".

- William Shakespeare (Me too )

My mother brought me up on that quotation! I'll bet I was spouting that myself by the age of 7 or so. That's just the way my family thinks.

 

[bbbamI]

I've never borrowed money from relatives or friends, but once my parents gave us $2k after DH and I had been married a couple of years. That was a LOT of money to us as we barely had a pot to pee in or a window to throw it out of.

A few years later we gave the money back to them as we had better jobs. In my family, it's about giving when there is a need. No one needs to ask.

 

[Moemg]

I've never borrowed money from friends or family and there was a time when I desperately needed money . I just rounded up all my jewelry and sold it . I never told my parents about the need because I'm sure they would have helped. I've always just figured it out on my own . I do not lend people money but I will gift money if I sense a need . I paid for my Mom's meds for years and I also paid for a nursing aide to help her when she lived alone . I have given my daughter money when I thought she needed some . Isn't that what money is for ? To be able to help the people you love .

 

[FUEGO]

I borrowed $60k from my parents during my last year of law school. I wanted to buy a house that the city had up for auction and it was going for roughly 30% off market values and didn't need much work. DW and I were both in law school at the time, hence little earned income.

We had the rest of the cash necessary to buy the house outright without getting a mortgage. I knew my parents had just refinanced and cashed out a lot of equity in their house in preparation for some major remodeling/expansion at their house. They weren't getting great interest rates from the bank, and didn't want to lock the money up long term in a CD. So I proposed DW and I borrow the $60k from them, pay them more interest than their bank savings account was paying, then pay them back once I had a job and could easily get a mortgage. I don't recall if we made payments while we were still in school or just paid them off in one lump sum. We obtained a mortgage roughly 7 months later and repaid my parents in full.

So a beneficial arrangement for all of us. Mostly for me and DW though, since we got a steal on a house that has worked out well for us financially and as a place to live.

 

[IndependentlyPoor]

Off topic, but this pushed my nostalgia button.

The week after I graduated from college and moved to Austin for my first job I wrecked my car. $2000 dollars worth of damage, and my fault too. Liability, but no collision insurance. $2000 was a lot of money in 1977 for a guy who hadn't even seen his first paycheck yet.

I couldn't bring myself to ask my parents for the money, so I called the bank in the little bitty town where I grew up. I didn't even have an account there anymore, but the head teller and bank president were both in the same high school graduating class (of 1937) as my parents. I think there were 30 kids in that class. Like I said, a little town.

The bank made me a signature loan and sent me a cashier's check along with the loan documents in the same envelope. My next telephone call was to my parents, but I made the folks at the bank promise that they wouldn't say anything if one of my parents happened to walk in before I could reach them.

There are some advantages to small towns.

 

[plex]

Have never lent or borrowed from friends/family. Parents did help pay 1/3 of undergrad, the remaining amount I earned by working/tax returns/scholarships, the majority of it was paid from working, graduated almost a full year early. Also received a $5k gift from my parents at graduation (which I count towards the 1/3 they paid for undergrad).

I have tried to repay them back in the meantime with financial/legal advice, but would like to buy them one or two large gifts in return at some point when I really start earning a full-time income. I am really hoping they do not give me a significant gift for graduating from law school a month from now.

 

[Rustic23]

Nope, (this should have been a poll, much quicker)

 

[Texas Proud]

Yes... and yes...

I borrowed money from my mom to pay for college... she had offered it as a gift, but I declined...

Then later I borrowed money for a down payment on the house... this one I did not pay off for a LONG time... but I always paid a lot more than the bank was paying... sometimes 2% higher than the bank..

My mom loaned money to almost all of her 6 kids... but when a BIL took advantage by borrowing money from her instead of a bank for investment property and she had to do some moving around of money that was not wise... I told her she should put a stop to it... everybody was given one year to pay everything off... only my poor sister was not able to do it...


Hmmm... going to have to check up to see if she has paid anything in the last few years...

 

[WhoDaresWins]

Never. That said, my Dad made some generous gifts(unasked) to my husband and myself when we were first starting out. He bought us a new car as a belated wedding gift(when we finally moved out of NYC). Then later gave us an old car that he had when my husband and I vied for use of aforementioned new car. He was spurred to this when he learned that husband had bought a second hand motorcycle. He also gave us furniture from my childhood home, insisted on paying for meals out, bought groceries when he visited, etc. He offered to co-sign the mortgage on our first home, but we did not need this help and declined. Oh, and he did pay for a fairly lavish wedding when we married.

 

[Fireup2020]

Parents shake their heads when attempt was made to repay their "gifts" (college allowances, etc) to me over the years. They did loan my ex/"us" $2K when he got an omnious "pay or die" letter from the IRS for old student loans right after we got married (his parents were in NO position to assist) They won't take my $$$ for his loan - and we grumble about him every few years...they are still miffed "he" did not repay it.

 

[Sesq]

Yes, and maybe (can't remember).

In my high school and college days I borrowed some from my parents. My mother kept a running, typed total of what I had drawn. After I was employed I paid all of it back. I think it was in the 3-4K range, and had included some money I borrowed to travel around when I did a semester in Spain. Never had to go back to the well after that. I also borrowed some for a high school trip to the then, Soviet Union but under the terms of the deal I had repaid that over the summer after the trip, well paid half, I think they gifted me the other half. I remember being very nervous to ask to borrow and go. Cool experience at 16.

I may have borrowed $500 once from a friend when buying a car till my next paycheck, when my credit was all screwed up due to an undetected collections issue. I can't remember if I needed to borrow it, or if it was offered and I wound up not needing it. First and last car loan (not the $500), boy did that rate stink. Came into some money shortly after and paid it off in under a year. Good car though.

 

[clifp]

I borrowed my from my parents for my down payment for my first house. They always have lending money to their kids, just as their parent did for them.

 

[Nords]

When I was a junior in college we were eligible to join a military-affiliation life insurance company for their "midshipman loan". They gave you money (Gumby, was it $6000?) at a ridiculously low interest rate and IIRC you didn't have to start paying off the principal until you graduated. You also had to buy some of their life insurance.

Interest rates were kinda high in 1981. I seem to remember that the insurance company's loan rate was 6%. A veritable handout.

At the time I was keeping up a regular weekly correspondence with my grandparents, and I mentioned this deal as part of the filler material in my next letter. I swear I had no ulterior motive, and at the time I was money-ignorant enough for that claim to be believable. They promptly offered to loan me the money at 1% less than the insurance company, so I took their offer. My father showed me how to do the amortization spreadsheet and I sent Grandma & Grandpa the payment table along with my first check. Then I bought myself a brand-new sportin' 1981 Mazda GLC hatchback. (That was the first and last time I bought a new car from a dealer.) I paid the loan off in "just" three years because I'd started getting submarine pay.

Nearly five years later spouse and I were trying to buy a house in Monterey, CA. Goldilocks Realty, Inc, had shown us "too cheap", "just right", and "too expensive". We, of course, opted for the last option but it was... too expensive. Spouse knew better than to talk to her folks about borrowing down-payment money but I hadn't yet learned that lesson so I called my dad. Bless him, he said "Sorry, Nords, all our money is tied up in our mutual funds and we can't sell them right now." At the time I wasn't money-smart enough to understand what he was really saying, so we gave up our housing fantasies and "settled" for "just right". That cheaper mortgage payment, and saving the "extra" money we would've spent on shelter overkill, made a big difference three years later when we moved to Hawaii.

Never borrowed anything from family or friends since. We've had money gifted to us, but it came with a whole spider's web of attached strings and it was a big relief when the grantors asked for it back. Never going there again.

Now we're trying to figure out how to handle our own gifting concept with our kid. There has to be a fine line between "good kids get a good start" and "affluenza". At this point the best option seems to be helping with her TSP or Roth IRA contributions, where the money is relatively difficult to obtain for frivolous purposes. It seems to be a better idea to start trickling out the inheritance now, where it can compound tax-free for decades and maybe fund another generation of ER, than to make everyone wait another 40-50-60 years. We'll see how her fledgling sense of fiscal responsibility holds up when she's out of the nest...

Oh, and here's a picture. We kept that car going for 12 years and 113K miles before too many things rusted through.

 

[Martha]

We borrowed $3000 from my FIL to help buy our first house. We paid it back. He was surprised and said we could borrow money anytime.

 

[kumquat]

Yep, around 1981 our mortgage renewed and the interest rate went from ~11% to 21%. DM offered us the mortgage principle for 1 year interest free as a Xmas present. We accepted and repaid her within the year without having to take a new mortgage. It hurt, but we came up with $20K from a $55K gross. That was a big start to being FI. FWIW, DW was PG, but working, at the time. Made it all the more important.

 

[Gumby]

When I was a junior in college we were eligible to join a military-affiliation life insurance company for their "midshipman loan". They gave you money (Gumby, was it $6000?) at a ridiculously low interest rate and IIRC you didn't have to start paying off the principal until you graduated. You also had to buy some of their life insurance.

Interest rates were kinda high in 1981. I seem to remember that the insurance company's loan rate was 6%. A veritable handout.

I took the loan from Navy Mutual Aid. $6k at 6% seems about right. It paid for my first car, a 1972 Triumph TR-6.

With respect to the OP's question -- nope, never borrowed money from family or friends. The last money I ever got from my family was the day I (at the tender age of 18) joined the Navy (7/6/77). My dad shook my hand and wished me luck. My mom kissed me goodbye and, being a little more practical, slipped me a twenty.

 

[kyounge1956]

I borrowed my from my parents for my down payment for my first house. They always have lending money to their kids, just as their parent did for them.

My parents loaned me the down payment on my first house, and also co-signed the loan on my first new car. I don't remember whether they charged me interest on the down payment.