What is a Family Loan?
A family loan is a personal loan made to a family member. The degree of relationship doesn’t really matter, and these loans are undoubtedly common. Over $60 billion US Dollars (USD) per year is loaned to family from family. Despite the common nature of family loans, people should be aware of some of the implications of these loans both in continuing healthy family relationships and in potential tax ramifications. It can be difficult to give a family loan if you don’t fully define the terms of repayment, and some people recommend that you always consider the money a gift. When family members don’t repay loans, they may cause great strain in relationships. If the lender considers the money lost at the onset, this may help reduce potential conflict later. It’s also advised that you not lend money to anyone unless you can afford to lose it. Unlike a bank, you don’t have any type of loan insurance that will return the money to you if a relative doesn’t pay it back. People seeking a loan fro
