How much interest shall I pay my friend?

[BornToShopForcedToWork]

Hello,

My friend is lending me £950 and i want to pay her back with interest at a better % as the banks do. How much interest should i pay?

Thanks for your help.

have a look at a few bank websites to see what "enticing" offers they're advertising and take your cue from those

If you insist of paying interest, 5% should be enough. That's £47.50.

I borrowed £10,000 from my pensioner parents once, was determined to pay them back with an extra £500 and did.

If someone is good enough to lend that sort of money, it's nice to show your appreciation. Good for you.

Depending on how long you're borrowing it for, I'd round it up and pay her back £1000.

If you had a loan from a workplace the government guidelines are that you have to pay a marginal rate of interest. Ie not sero but not as much as a bank would charge. i think that rate is currently 4%.

How long are you borrowing for?

If it is for a year and you want to pay her what a bank might charge for an unsecured loan over a year then maybe up to 15%.

If you want to pay her what a bank would pay her on a deposit then perhaps 1%.

You can see how banks make money.

I think rounding it up to £1000 would be fair

It wont be for, 1st of november the latest. She doesnt want me to pay interest, howrver she is saving for a flat and i dont want her to lose out.

You can get 3% in a savings account over a year on £950.
www.moneysavingexpert.com/savings/savings-accounts-best-interest#santander

But 2 months interest at 3% AER is only £4.69.

Giving her a fiver looks a bit insulting though to be honest.

Either:

just pay back £950
round it up to £1000 even though that works out around 40%

or pay back £950 and buy her a bottle of wine/take her out to dinner

If it's for 2 months then she won't lose anything be lending it to you. I'd add £20 on as a thank you gesture or if she refused that I'd buy her some wine and chocolates.