View Full Version : Legal to lend money and charge interest?

23rd June 2010, 07:16 PM
Hi all, a friend asked to borrow money from me. I normally would have just lent to him but another friend was telling me that it's not legal to charge interest, otherwise you will be considered an illegal money lender. I was thinking of tapping on a credit line that I have and charge the same or slightly higher interest. Now, if I lend the money to my friend at no cost, I will have to absorb the interest payments on my end, which obviously does not make sense... does anyone know for a fact whether it's truly illegal to lend money and charge interest?

24th June 2010, 01:49 PM
why in the first place you need to tap on your credit line just to loan your friend. you should only loan the money if you have extras and not take it on a credit line. this does not make sense.

24th June 2010, 04:29 PM
Hmm, I guess I'm efficient with money. Basically, whatever money I have set aside is set aside for a rainy day so I certainly will not touch that. The rest of my funds are in investments so if I were to lend money, it's either I tap on my existing credit line or liquidate my invesment. I borrow money at around 2% to 3% per annum and invest the money to give me 10% - 20% per annum so if I were to liquidate my investment, I will have to charge an interest rate of 20% and not 3%. Otherwise, not only do I not gain anything financially, I will incur a loss...

21st July 2010, 10:23 AM
ok that does make some logic. but then again how confident you think you friend will return you in time or are you taking this as an investment charging him interest.