Is it legal to give a "private" personal loan?

antoinolachtnai

Niner leprauchan wrote: »

I'm going by an act from 1933 here. As I said above, new legislation or case law may have dealt with your question. Google may well have the answer at a more reasonable time tomorrow.

If the OP is going to be in the business of moneylending then you need authorization from the CBOI. By the sounds of it this is not the case in relation to the planned lending.

If the OP doesn’t want to lend the money for whatever reason then they just shouldn’t.

Donald Trump

antoinolachtnai wrote: »

If the OP is going to be in the business of moneylending then you need authorization from the CBOI. By the sounds of it this is not the case in relation to the planned lending.

If the OP doesn’t want to lend the money for whatever reason then they just shouldn’t.

It was a hypothetical question vis-a-vis people giving one-off loans on, as another poster put it, "pay it back if/when you can" basis.


Suppose you give a family member 20k to set-up or expand a business. You don't really care in reality if you get it back as long as they give it their best effort. The recipient genuinely intends to make it work and says they will repay you and reimburse whatever tiny interest you'd have gotten on deposit.


So they put the loan on their business account. They pay you back and write off the interest as an expense. You get the money back and you pay tax on the interest received. You're not worried about what Shakespeare said nor what cases TV judges on the telly have had. But if someone inspects those accounts they will see that you loaned money and received it back. Are you breaking rules doing that?



We all know people who have done this. I am sure that plenty of people get "loans" from their parents or family to buy houses for example. There you are somewhat covered as a gift when you remain under threshold. But suppose you are above threshold. Does that single once-off loan, technically speaking, make the giver an illegal moneylender?

Jim2007

Donald Trump wrote: »

But if someone inspects those accounts they will see that you loaned money and received it back. Are you breaking rules doing that?

No. And it happens on a fairly regular basis in families, you are way over thinking it. It’s not a gift, because it is clearly separated and it is not money lending because you are no behaving as a money lender within the meaning of the act.

Henry Ford III

CBear1993 wrote: »

.........the first pieces of advice you received above, some amount of pencil pushers and PC brigade on here.

People in this day and age still get “gifts” from their family members or parents upto all sums of money, even €100K.

You don’t need “legal advice”. I know first hand of friends who have went out and bought houses with big sums of “gifts” and the only back up they needed was a piece of paper/letter signed by the person giving the gift to say they are passing on these funds. And the solicitors and all parties involved, including banks like AIB were fine with this.

If it’s good enough for the top brass it’s good enough for you to give a gift in whatever way you wish to do so. Revenue never came near the people in question above.

Not everything has to be declared and putting your hand up in this country despite what a lot of board warriors on here would have you think, good neighbor law abiding citizens. Sure don’t they take enough money off of us!

CBear1993 I've edited your bad language. Don't repeat that stuff. In addition you've insulted our subscribers and contributors - that is unacceptable.

antoinolachtnai

antoinolachtnai wrote: »

If the OP is going to be in the business of moneylending then you need authorization from the CBOI. By the sounds of it this is not the case in relation to the planned lending.

If the OP doesn’t want to lend the money for whatever reason then they just shouldn’t.

Jim2007 wrote: »

No. And it happens on a fairly regular basis in families, you are way over thinking it. It’s not a gift, because it is clearly separated and it is not money lending because you are no behaving as a money lender within the meaning of the act.

Can you guys point out where this is written? The 1933 act doesnt state only for profit or by a commercial entity

antoinolachtnai

Niner leprauchan wrote: »

Can you guys point out where this is written? The 1933 act doesnt state only for profit or by a commercial entity

It doesn’t state that no. It is understood. The Act is just part of a much larger complex of banking and consumer protection legislation.

You could look at

http://www.irishstatutebook.ie/eli/1993/si/167/made/en/print

Which may give some comfort in relation to the type of loan the OP is talking about.

But reading bits and pieces of legislation is probably not the best approach. The law about investing and lending is pretty complex. You won’t get a grasp of it by just reading legislation. Get professional advice if in any doubt.

Jim2007

Niner leprauchan wrote: »

Can you guys point out where this is written? The 1933 act doesnt state only for profit or by a commercial entity

CONSUMER CREDIT ACT, 1995

Jim2007

Jim2007 wrote: »

CONSUMER CREDIT ACT, 1995

Cheers.

I'm a wiser man now.

coylemj

As Jim stated above, the Consumer Credit Act 1995 is now the legislation covering this area. It repealed (among other provisions) the Moneylenders Acts of 1900 and 1933.

Section 2 sets out definitions and a 'moneylender' is defined as follows:

“moneylender” means a person who carries on the business of moneylending, or who advertises or announces himself or holds himself out in any way as carrying on that business; but does not include—

........

(e) a person who supplies money for the purchase, sale or hire of goods at an APR which is less than 23 per cent. (or such other rate as may be prescribed),

The inclusion of 'carries on the business of moneylending' would appear to exclude casual loans among friends or family. And the cap on an APR of 23% would appear to provide an exemption for retail stores who offer easy payment options where the effective APR does not exceed that number.

Donald Trump

coylemj wrote: »

As Jim stated above, the Consumer Credit Act 1995 is now the legislation covering this area. It repealed (among other provisions) the Moneylenders Acts of 1900 and 1933.

Section 2 sets out definitions and a 'moneylender' is defined as follows:

“moneylender” means a person who carries on the business of moneylending, or who advertises or announces himself or holds himself out in any way as carrying on that business; but does not include—

........

(e) a person who supplies money for the purchase, sale or hire of goods at an APR which is less than 23 per cent. (or such other rate as may be prescribed),

The inclusion of 'carries on the business of moneylending' would appear to exclude casual loans among friends or family. And the cap on an APR of 23% would appear to provide an exemption for retail stores who offer easy payment options where the effective APR does not exceed that number.

Wouldn't that last point mean that an actual "moneylender" could carry on business with a licence as long as they only charged 22%?


Woman needs a loan of a few hundred near Christmas to buy things. Unregistered moneylender gives her 1000 quid to buy presents and Christmas items and wants interest paid at a rate of 22% ... with a large penalty for early repayment! Perhaps they buy the goods and resell to her and "finance" that purchase at 22%. Although if they were doing the latter, they could also mark up the goods. So that would be a major loophole, no?



I know of a vulnerable person who was preyed on by legal moneylenders a few years ago. When people found out they gave her the money to stop the fucker coming to her door every week and rolling over the debt...which he had done a few times......she still got charged about 95% of the interest that she would have been charged over the remaining life of the "loan".


Technically he wasn't allowed to roll over the debt the way he had been doing it but he would have been allowed to give "new" loans once she asked. So there was no point complaining about it because it couldn't be proven.

coylemj

Donald Trump wrote: »

Wouldn't that last point mean that an actual "moneylender" could carry on business with a licence as long as they only charged 22%?

As long as it was for the purposes of 'purchase, sale or hire of goods', yes. And my reading of the act says that would not cover loans where the lender hands over cash. Which is how the vast majority of moneylenders operate.

Donald Trump

coylemj wrote: »

As long as it was for the purposes of 'purchase, sale or hire of goods', yes. And my reading of the act says that would not cover loans where the lender hands over cash. Which is how the vast majority of moneylenders operate.

hmmm. So a dodgy character could register a business selling toys for example and then when Mary wants a Playstation for little Jimmy at Christmas he can sell her one at double the normal retail price under a buy-now-pay-later scheme where he charges 22% interest on top of the inflated price.


I don't like the sound of that loophole.

coylemj

Donald Trump wrote: »

I don't like the sound of that loophole.

You’re inventing nonexistent loopholes, moneylenders aren’t operating shoe or toy stores, they hand out cash. And the act has been in force for 25 years, don’t you think they would have closed off any such loophole by now - if it existed?

Donald Trump

coylemj wrote: »

You’re inventing nonexistent loopholes, moneylenders aren’t operating shoe or toy stores, they hand out cash. And the act has been in force for 25 years, don’t you think they would have closed off any such loophole by now - if it existed?

Same as how they closed off the loophole for the vulnerable person that I knew who was struggling and the man calling every week to collect the payment making it known how easy it would be to take on a new loan to clear the old one.

Of course, they had her sign whatever paperwork to say that she requested it rather than being a victim of predatory lending. But it didn't stop the vultures did it?


Plenty of people in poorer areas are victims of moneylenders around times like Christmas or Communions when there is pressure to spend money they don't have. Those moneylenders are breaking whatever rules so if caught, they could be prosecuted. What you described is indeed a loophole for a smaller local moneylender. I would say that the reason they don't do it is probably that they don't need to as they aren't caught anyway.

sbsquarepants

If you are considering lending someone money (in a personal capacity) and wondering how you will get it back in the event of non payment - don't lend it to them. You already know they aren't to be trusted!