AIBU to object to my husband taking a large loan for a friend?

[Sefal]

My husband has had a friend for some 40 years, it is probably more accurate to describe his friend as being like a brother to him.

His friend has recently got into some financial difficulties due to a building project costing more than expected. His friend has no way of obtaining money to finish the building project, and without money to finish it, the whole project will need to be ‘written off’, essentially throwing tens if not hundreds of thousands of pounds away and facing bankruptcy. My husband then offered to get a loan out for a lot of money (tens of thousands), to give to his friend on the promise his friend pays it back (plus the interest) when the project is completed. His friend has leant him money in the past, but it has always been from his savings never anything like this. It’s also been small amounts - a couple of grand here and there.

I think this is absolutely insane. Me and my husband both earn very well, but we do not have any savings and have loans and debts ourselves. We have also committed to some very high expenses ourselves for the next few years, and my husband in particular has been very anxious about money, which has in turn made me very anxious and I have been trying to find ways to increase our income. This loan would be hundreds of pounds a month, which as I pointed out, why are we worrying about money when my husband can afford an additional hundreds of pounds on a loan?

I also pointed out things such as:

what if your friend can’t pay you back
what if the project costs more
what if you need it paid off and your friend wants more time
what if your friend falls ill
what if you lose your job
what if you fall out with your friend

Essentially pointing out all the reasons why this is nuts. I also told him that if he chooses to do this, I won’t be supporting him nor will I be taking any notice of his fretting about money or wanting to live frugally. I’ve told him if it affects our lives e.g him saying we can’t afford something, I’ll be reminding him of his ridiculous loan. We’ve had a massive argument because of it.

AIBU?

No, you are not being unreasonable. I would fight tooth and nail to change his mind. I would even say I would ask for a divorce if he really intends to go through with it. The problem is, this will affect you no matter what. This loan could seriously come back to bite you, just as much as DH. It’s fucking madness.

Absolutely not, recipe for disaster, and it will end his friendship. Money has funny ways for causing trouble and this will definitely be one of them. If he values his friendship and your financial affairs then the answer is just no.

Absolutely no, just no no no. Why can’t the friend get a loan? This is going to end badly.

My earnings go into my own bank account. Would I be liable for this loan in anyway?

The friend has already maxed out all borrowing…

I would be absolutely furious in your shoes, What on earth was he thinking?

I could understand it (not agree with it) if he’s always a bit cavalier with money, but as you say he’s worried about money and he’s telling you that you need to cut back then this is bizarre.

The fact that the friend can't get a loan himself is seriously concerning and casts a lot of doubt on his ability willingness to pay it back.

No no no no no no no no no no no x forever

Absolutely no way.

If he’s determined to go ahead then he needs to feel the pain of this, so you stop getting any treats he likes, don’t do any activities he wants to do etc. In fact I’d tell him I’m taking the DC on holiday next year and his share will go instead on debt repayments.

It is infuriating and bizarre. On the one hand he is talking about how we need to cut back, be more frugal, no excess spending and ‘build our savings up’, but then in another breath discussing committing to a loan of hundreds of pounds a month!

I also pointed out this will cause a lot of arguments between us, as I won’t be hearing any word of how worried he is about money or that we need to cut back on things or that we don’t have money to do things, if he does this.

Is this for a building of sorts. If so he needs to be on the deeds as part owner until paid back or will that cause other issues?
I wouldn’t t loan the money.

Worried about money, no savings and debt/loans already hmm?
The loans will surely need to be paid back in instalments straight away? Can he cover it until the friends project is complete? When is that timewise?!

Is it an unsecured loan?

This would be an absolute deal breaker for me. Either you both agree to do it or it doesn't happen.

So, the project is failing and facing a massive cost overrun. Is there any likelihood it will make a profit? Or break even? What are the chances of your DH's friend actually being able to pay him back? There is a reason he can't borrow commercially - it's too high risk.

Also, the organisation making the loan to your DH will want to know what it is for. If your husband is honest "to lend to a friend who is not creditworthy to spend on a failing project" he isn't going to get the loan. If he lies, then that's fraud and deception. If your husband wants a face-saving way to backtrack then saying he has been refused the loan would be a good way out.

I asked when the building work was likely to be completed and he said: ‘1 year, 18 months, who cares as long as I get the money back.’ This was said in the heat of the argument.

It would be a personal loan in husbands name.

Just ... no!

The plan seems to be that the building work gets completed, sold, then at that point the loan is repaid from the profit.

100% no

What asset is your DH going to secure this loan against? He will have to disclose to the bank what the loan is for and no bank is going to lend him hundreds of thousands of pounds to pass on as an unsecured loan to a mate. The bank will want security over an asset your husband has. From what you say, you don’t have enough savings to cover it, so is he planning on securing it against your family home?! If you are on the deeds of the home, he can’t do that without your consent, which I assume you will - and rightly so - refuse to provide. That should be the end of it.

My husband reckons he will be able to get a personal loan against his salary (which is high).

I am on the deeds.

It really doesn't sound like there will be any profit if the friend has already borrowed everything he can. I'd also be wary of going on the deeds for the project, I'd be worried about your DH ending up Ina position where he's legally responsoble for project debts if he's down as a co-owner.

No, no, no! There are so many tales on MN - and indeed elsewhere - where friend lending to friend has proved disastrous.

And the amount! He’s bonkers!

Just don’t do it, Mr Sefal!