March 25, 2023

Bucks Blog: Upsides and Downsides of Family Loans

In this weekend’s Your Money column, I provide a primer on creating a family loan pool. The advantages here are many. There is potentially more money available if many family members contribute. Many people can participate in setting the rules and distribution of loans, so emotion is less likely to get in the way. And it may be easier to enforce those rules if an entire clan is standing behind the loan.

So what are the downsides of loaning money to a family member, and can a structure like the one I describe help avoid some of the potential pitfalls?

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