Relationship-based lending

Relationship-based lending to simplify loans b/w friends & family enabled with automatic ACH loan payments.

I recently lent a heavy sum to a friend and expected everything will go smooth but the reality was something very different, unexpected and kind of awkward?!

This feature I believe can safeguard interests of both the parties (probably with mutually decided Interest rates as well?)

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Yes, we have a large market for Unstructured Loans!
Leveraging personal relationships instead of personal credit score to lend & borrow money sounds interesting!

Guess what @Raghav!
Something very similar was suggested by our community champion @Vanshika_Mehta, she also went to the extent and suggested interest to be charges on money lent to friends and family.

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Wow, just amazed by the idea. if materialized would be a great feature.
btw, are there any tax implications for these kind of lending activity by retailers ? if there is, you should add that too as a feature.

also, i wish o know how you are approaching the problem.
say i give a loan to my friend, we agree to a rate and u will help setup a emi scheme. what if my friend doesnot maintain sufficient balance. there is still no recourse right ? or am i seeing it wrong altogether ?

Hi Ratna,

We are still discussing the idea and its merit amongst the community. Glad you see it of use for yourself.
As far as tax implications go, Income earned by way of interest should be taxable in the hands of the lender and TDS should not be attracted considering both parties are individuals.

There could be multiple other ways to execute it, not interest. But flat fee, etc.

As far as recourse goes, the relationship was vetted by the user and hence that wouldn’t be available in what is being discussed.

Would you lend to a friend whom you would want to use recourse against? :stuck_out_tongue:

i wont be not lend to friends whom i may need other recourse mechanisms :joy: but, yeah, behaviors are dynamic and money is a bad thing. was just thinking if it would be possible.

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In my opinion, it might be a little tricky to have relationships mixed up with money. But using this construct for lending seems to be a great idea. P2P Lending with companies like LenDenClub and Faircent apply a similar model and minimise risk of defaults by being the mediator between you and a borrower. Don’t you think P2P is just an upgraded version of relationship based lending bringing digitisation into the picture?