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Is it illegal to lend money to a person and then ask for interest to be paid to you?

(6 Posts)
Namechanger2015 Tue 01-Nov-16 20:55:21

It's the crux of my exH financial arguments in court, that he had lent vast amounts of money to a friend in return for a 10% interest payment for the loan.

I have read online on MSE that this is illegal but not come across this anywhere else before, can anyone advise?

It doesn't change a great deal but it would be interesting to know what the judge will make of his case in court...

prh47bridge Tue 01-Nov-16 21:18:58

It is not illegal to ask for interest on a private loan. The requirement for the lender to be registered only kicks in if the lender is running a consumer credit business, not if they are simply making a loan to a friend. The lender must declare the interest as income for tax purposes.

Namechanger2015 Wed 02-Nov-16 10:17:14

Thank you prh47bridge, that's really useful to know!

Me2017 Wed 02-Nov-16 17:27:55

And that 10% interest would be part of his income considered by the court on your divorce in terms of what his income is for assessment of any spousal support.

Of course he may not really have given the money and is just trying to keep it out of your reach on the divorce; sadly a common practice and hard to disprove.

Allthebestnamesareused Wed 02-Nov-16 18:30:55

A loan due to him will be an asset to be included in the pot.

Namechanger2015 Wed 02-Nov-16 19:48:35

Thats good to know, he claims he borrowed money from his family and promised them 4% interest, and then lent the whole lot to his friend (£850,000) at a rate of 10% interest. So he stands to gain 6% overall. Of course no paper trail or bank statements to this effect apart from the money going out to his friend. No interest payments have been made to stbxh in the past 2 years.

I wondered if this whole set up is illegal. His story has so many holes in it!

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