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June 25, 2001
By
Bob Buckham
Website:
http://www.best-choice-loans.com
>
We have a better way to borrow between family and friends than just an iou
The iou stories are common enough: A parent provides a child with a car loan, a brother lends a sister money to get by after a layoff, or a friend gives another friend start-up money for a business in exchange for an iou.
A recent study by the Monitor Group, an investment advisory company in Washington, tried to analyze the person-to-person iou loan market. The company interviewed 400 people nationwide last year and released their findings last week.
It found that roughly 7% of all American families were either borrowing or lending money to family or friends on an iou or a handshake. The average loan amount is $9600 and the average duration is 18 months.
Only 3 in 10 loans, however, are ever formalized with iou written agreements, perhaps accounting for the higher-than-average-default rate of 14%.
Still, the main benefit of borrowing from people you know, in exchange for an iou, is that it is a lot cheaper than going to the bank. 88% of person-to-person loans carry no interest, and for those that do, the average rate is 7.4%. That is about half the average rate charged on regular credit cards and personal loans.
If you're thinking of doing an iou type loan, we have a great site for formalizing loans between families and friends.
For
more information on iou - click here!
> About The Author:Bob Buckham is a successful author and the
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