Estimated read time: 2-3 minutes
This archived news story is available only for your personal, non-commercial use. Information in the story may be outdated or superseded by additional information. Reading or replaying the story in its archived form does not constitute a republication of the story.
SALT LAKE CITY -- When finances are tough, people often turn to family and friends to loan them money. Some Web sites now are designed to help keep friendly loans from becoming family feuds.
A number of Web sites are designed for peer-to-peer lending. They basically help manage loans for friends and families.
"I think it's always a good idea to get something down in writing when you're loaning money," said University of Utah finance professor Scott Schaefer.
He says if you feel the Web sites will help you get things in writing, great.
"Whether it's a good idea to pay the $200, there may be cheaper ways to do it," he said.
He does add the sites don't collect the loan money, you do. So if your deadbeat brother-in-law decides not to pay you back, you still have deal with getting your money back.
One Web site says when defaults do happen, most borrowers chose to restructure the loan.
Loanback.com is one of these Web sites. For a fee, it will administer a loan to your brother or cousin along with formalizing the terms and payment schedule. Schaefer says a loan should always be put in writing, even with family.
Schaefer adds that there are cheaper ways of getting a family loan in writing.
VirginMoney charges $199 for loan documentation that includes a promissory note, a repayment schedule and a review of documents for incomplete, unclear and unenforceable information. However, the review does not cover possible tax consequences that could be associated with the loan. For an additional $9 per payment, loan servicing is provided, which includes electronic funds transfer and e-mail payment reminders.
LoanBack charges $29.95 for a service that helps consumers create a promissory note, which includes a repayment schedule and e-mailed payment reminders.
------
Story compiled with contributions from Randall Jeppesen and Contra Costa Times.
