NFR - Loan Advice

[Admin]

Not me, but advice for a friend.

Currently lives with Family, got a loan out for their Brother of around £8k to help pay for a Mercedes, one of those jeep type ones.

Anyway, friend has lived with the brother for around a year now, moved in and rents a room for £500 per month.

Like anything friends / family related, it's all starting to break down now, brothers becoming aggressive, telling them to live by his rules etc, don't like it get out, wants nothing to do with them.

Friend has turned around and said up yours, not paying £500 a month to be controlled or restricted and is moving out in a couple of weeks.

The loan for the Mercedes still stands, the brother has been paying it monthly for the last year at around £300 something a month. There's around another £3k still left to pay but my friend is worried that if they move out, the brother will stop paying the loan.

From my friends perspective, I've said, they were stupid to get the loan out in the first place, let alone live / work with family as it never ever works out. There is no contract for the loan, but proof the money was passed to him and payments per month have been coming back into their account monthly.

I'm not into finance, but is there anything they can do to cover their ass if the loan isn't paid like a solicitors letter or something or are they right royally screwed?   

[Airfix]

If the loan is in your friend's name, he is completely liable for it, irrespective of how it has been funded.  And defaulting on payments for it will render him (a) liable for court action and (b) unable/unlikely to get future loans (including credit cards and mortgages).

Sounds silly but can a third party not intervene?  Parents, for example?

[Admin]

If the loan is in your friend's name, he is completely liable for it, irrespective of how it has been funded.  And defaulting on payments for it will render him (a) liable for court action and (b) unable/unlikely to get future loans (including credit cards and mortgages).

Sounds silly but can a third party not intervene?  Parents, for example?

I know how I'd deal with it, but obviously it's not my loan.

To be fair, he promised to pay every month, and he has done so for over a year now. I can't see why he'd knock it anyway due to the complications attached to it.

a) He runs his own business, bad words can be said against him b) He knows certain people around him are aware of the situation c) he will end up becoming a black sheep of the family.

I've said to my friend that they are automatically thinking the worst and need to assess the situation when they move out. If the loan is continued to be paid, happy days. If not, send the boys around.

 

[Craven Mad]

If the loan is in your friend's name, he is completely liable for it, irrespective of how it has been funded.  And defaulting on payments for it will render him (a) liable for court action and (b) unable/unlikely to get future loans (including credit cards and mortgages).

Sounds silly but can a third party not intervene?  Parents, for example?

I know how I'd deal with it, but obviously it's not my loan.

To be fair, he promised to pay every month, and he has done so for over a year now. I can't see why he'd knock it anyway due to the complications attached to it.

a) He runs his own business, bad words can be said against him b) He knows certain people around him are aware of the situation c) he will end up becoming a black sheep of the family.

I've said to my friend that they are automatically thinking the worst and need to assess the situation when they move out. If the loan is continued to be paid, happy days. If not, send the boys around.

 

Legally, if the loan is in his name he is responsible for paying it back. Claiming it was taken out for someone else and not paying is likely to damage his credit rating/piss of the lender. It would seem that his best bet is to keep paying the loan but (if he is this way inclined) involve solicitors, using the regular payments as evidence that the loan was taken out to help the brother and is a responsibility the brother has. If the brother still has the car, and you can evidence that the original £8k was used to finance the car, and there have been regular payments made, your friend has a (fairly) good case.. But it is a gamble and solicitors can get expensive..