Loans and family don’t mix.

This man was asked by his sister-in-law for a loan of over $1000, so he created a loan agreement. But SIL is hesitant to sign and even made some underhanded comments to his wife.

Read below for the full story.

AITA: Family member loan – I asked for an agreement

Sister-in-law needs money on a short-term basis, just a few thousand dollars. I have a rule that anything over $1000 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.

This man thinks that the loan agreement was fair.

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.

But he felt bad because his SIL was not expecting a contract at all.

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 a jerk 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.

Loaning money to family almost never ends well.

Let’s see what other people think to this story.

Here are some valid possiblities.

This one shares a personal thought.

This one takes the SIL’s side.

Another good point.

And lastly, people are calling out his unreasonable terms.

Written agreements are fine, but the loan shark rates aren’t.

If you liked that post, check out this story about a customer who insists that their credit card works, and finds out that isn’t the case.