Financial thoughts..

[azekeil]

Reading a recent friend's post about her woes with extracting money she was owed from someone, it occurred to me that there was no good way to set this up. You either get the lawyers in to draft up some sort of agreement (yeah, right), or you trust them, with all the associated risks and downfalls of that option.

I think the first bank who devises a method of transferring funds that requires both parties involved's authorisation to change would make a killing. It doesn't have to cost anything - just the number of customers who would want to set up an account with them.

Imagine it - yes, I'll lend you £500 but we're going to set up a guaranteed payment thing: If we don't both cancel it in 6 months time, your bank pays me £50 quid a month out of your account into mine automatically (by standing order, direct debit, etc) until the debt is paid off (or plus interest).

Of course, there are banks and other companies around that will give you loans, and they simply won't lend to unreliable people - that's people without incomes and people who have bad credit history. That's the way the industry has evolved, and it's done so for a reason...

But it would fill a niche in the market, the 'friends loan'...

Comments

[ev1ldonut.livejournal.com]

They won't do that for a simple reason. They don't want people lending each other money for free (or nearly free).

If you're doing that, you aren't taking out their loans, so they aren't making money. Also, on top of them not making money off you, they'd also have the extra cost of administration for setting up this service.

It's all economics I'm afraid. *shrug*

[azekeil.livejournal.com]

Ah, but this wouldn't be in competition with them, because they don't want to set up loans with people who have no income or have a bad credit history.

I think on balance the number of people who would agree to lend money - even in this semi-guaranteed form - would be limited anyway.

True, there is an overhead, and a few initial legal issues to work out.

[wechsler.livejournal.com]

There are, of course, plenty of places that *will* lend to people with unreliable credit, at *ludicrous* rates. Only some of them break arms; the rest actually seem to be legal.

What happens if the loan is payed back and the loan-giver doesn't cancel the agreement? Should the bank investigate the agreement to see who has / hasn't paid? The liability and complexity there is immense.

[azekeil.livejournal.com]

True.

[sarah-mum.livejournal.com]

Two pieces of sage advice apply here:
1- Never a borrower or a lender be.
2 - If you lend a 'friend' £20 and never see them again, it was worth it!

[wechsler.livejournal.com]

PS: This is known as escrow

[azekeil.livejournal.com]

I knew there had to be a name for it, thanks.

[dj-pooka.livejournal.com]

I vaguely remember reading about something like this being set up at one point - but I can't remember either what it was called or where it was I found it... *ponders*

[katya-uk.livejournal.com]

hey hun,
i have friended K and E and we have a few other friends in common too so wondered if you'd like to friend me, and of course i would friend you back ;o)

[azekeil.livejournal.com]

Why not? I've friended you - sorry though, there isn't much that's not public except for work-specific stuff. Feel free to add me :)