View Full Version : under what conditions should you charge interest on money loaned...

12-17-2005, 01:19 AM
...to friends?
for the past few months i've had a constant %5-%10 of my bankroll loaned out to my friends without interest. any time any of my friends needs money they come to me and it's not a problem because they always pay me back, but it's a bit of an annoyance not having that money on hand. is grattitude and appreciation enough of a gain on the money loaned out? if there was no grattitude or appreciation, would it be ok to charge interest? or is the #1 solution to not loan money out at all? p.s. i don't know how willing some of my friends would be to loan me money if i needed it and they had it.

12-17-2005, 01:27 AM
Someday you will need a loan, hopefully your friends were remember how generous you were when they needed a couple bucks

EDIT: Ok, I should have read the last sentence of the OP, sounds like you need new friends, or to stop lending money. Just read Hamlet; Polonious gives expert life advice

12-17-2005, 01:27 AM
They are your friends, remember that. Friends don't charge other friends interest.

By the way, I think it's about time you bought your friends a very special gift (preferably over $100).

12-17-2005, 01:34 AM
Since you've set yourself up as the "Friendly, No-Vig, No-Teeth Loan Guppy," it's going to be hard to start charging anything. You ask for more than gratitude and prompt payment now, you may find yourself with less friends. Which means maybe they weren't so hot as friends anyway.

Start weaning them if it's bothering you. Find yourself with less and less available funds. Say you're on a really bad downswing.

Or get yourself a no-neck pal or two and get into the Sharkin' Bidnez.

12-17-2005, 07:54 AM
I've been in a similar situation. The solution is to simply explain to your friends that while you do not have the CASH handy, your credit is good and you would be happy to lend them the money charging them only what the bank charges you. That way you can still be a good friend and lend out some cash, while charging some minimal interest that is fair and reasonable - 5%-7% per year, compounded, just like the bank would - money costs money after all.

12-17-2005, 08:14 AM
If you want, you can tell them that although you have plenty of cash, you need it all to play poker.

For all they know you need to buy in with your whole roll every time you play.

Do they know anything about poker or bankroll management?

12-17-2005, 01:40 PM
It depends what the situation is. If by lending money you mean stuff like giving them $10-$20 and they pay you back in a week or so, the idea of even charging interest is dumb. However, if you're talking about loaning out a significant amount of money over a significant period of time, then feel free to.

12-17-2005, 02:36 PM
It kinda depends on how old you are.

But if you are young and your friends are in college or just tight for money, I would just keep lending money to them and not worry about it.

If you were older and the friends have good incomes, then I don't see why you have to loan money when they can easily charge it to credit cards, etc.

It depends on the amount also of course. The bigger amounts I would be less likely to loan.

12-20-2005, 03:58 AM
You're better off not loaning them money than charging them interest. The amount of ill will it generates will be greater than the interest you earn. People don't tend to be rational about these things.