My Parents Charged Me Interest on a Loan 

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I'm glad to write her tay I do hope she will help handle my paycheck properly☺️☺️☺️

Exactly! The parents were quite reasonable.

It was 3 years.

@@jimmymcgill6778 They loaned her money for 7 years total, and she was expected to pay it off in 3.

⁠

It was paid back within 3 years after graduating. She didn’t say when she received it. It sounds like she received it as a freshman so had it 4 years before making payments.

too much

Almost cringeworthy.

how you know it's one time?

@@tkdevlop that’s what she said. Borrowed 15k and paid back 18k for college. $1k interest per 5k borrowed paid back within 3 years from graduating.

Exactly!

​@@tkdevlopDid you not understand the video?

It’s not 20%. It’s more like 3-4% annually.

That's exactly how my father used to do when we were young & wanted to borrow money. He wanted us to learn how the world worked. If more people learned this when they were young they might not have so many money problems going forward.

@theburnetts I find it interesting how some people appreciate it while others don't. I lent my parents 80K for one year so that they could close on their new construction house, and charged them 1% interest to qualify this as a loan for IRS purposes. They paid it back to me 6 months late because the builder had delays (it was happening during the wood shortage in the country). Because of this I missed out on an opportunity to buy a condo, which then rose in price by 60% and caused it to become out of reach for me. I am still hurting because of it, but I am happy that my parents got what they wanted. Btw, they didn't like that I put a loan agreement / note for this, and felt that I didn't trust them.

@@onionpeeler2023 Yep. Every family is different and people can all have different expectations. Lending and borrowing money within a family is definitely tricky and not for everyone.

@@onionpeeler2023- OMG! $80K? I would feel incompetent if someone asked me for $800 (parents included). Lesson: DO NOT assist someone with something you don’t have yourself.

Damn, you Americans are crazy. Ask interest to your own child? 😅😅😅

"20%" 😂

“20% interest” not a 20% interest rate

I didn't hear that in her question. She said she is "wondering" if they took advantage of and it was useful to hear that she only started wondering AFTER her husband criticized her parents.

@curiouscat3384 if she understood math, she would understand that she was not taken advantage of and could be grateful for what her parents did to help her, help herself.

@@rhondavigil795 And that's where Rachel and Ken failed. Giver her credit for calling for help and they should have slowed down, gotten the facts, and done the math for her. I didnt' know that stuff in my 20's. Her husband is who started all the questioning

I think her parents charged 16% interest which is high..... a bank would have been 6%.

@@Anniefawesome She paid the extra interest for the financial grace option. If something bad happened between her and the loaning bank, she would have went to her parents to bail her out, all they did was offer her financial protection for a just in case scenario. With the bank, if she defaulted, her credit would've been ruined. Pay the parents the interest and keep it moving. Life is funny, she may need to borrow from them again in the future.

@@Anniefawesome 20% over a 3-year (plus time in school 4 yrs.) loan is not high. That sounds like 3-4% annually.

Lmao, I wouldn't call him a jerk. He just has different ideas about how to lend money to family. So does DR, who would've never "lent" the money in the first place. We all have different opinions, and it's really on her to squash her doubt, acknowledge she made a choice, and move on. I'm sure they can/will do things differently with their kids, and that's one of the best pts about growing up.

@@sspann I agree. Like I dont think interest should be tied to a family loan, or if it is, as low as possible in case any legalities come of it, like 1%. Of course it also depends on how close you are with your family I suppose, as dynamics can play a role.

Her husband IS a jerk. Not for the opinion, but for potentially permanently ruin the relationship between his wife and her parents, over something debatable at most, OVER FOUR YEARS! I think the deal is fair at least, considering the interest rate today and they are tight financially. I will never charge my kids interest personally, but I consider myself well off financially.

😅😅😂

My parents also charged me interest. I was happy to have my parents getting the interest. I would rather give them the interest then the bank.

Agreed. This to me was her parents teaching her stuff costs money

Lmao this was a LONG winded “no”

​@@rleonekc07they could have taught financial skills with an interest rate and a high one at that. These parents are lizards.

I don't think she was ripped off. However I do have major side-eye for any parent that loans to their child _With Interest_

Not sure what you mean. They agreed with exactly what you are saying. I would have made it shorter and called her out on her bullshit but they e made the same point you did

She might teach them a lesson later in life, when they will grow old and need help and she will charge them a "fair rate" of a few thousand dollars for adult daycare. ;) That's not a way to treat your family, unless you do not understand what the word means.

@@user-lm6me2tz9t Really nothing wrong with using a “family” bank. Rather pay and pass down wealth within family than outsource to strangers. You just proved my point that there are no guarantees your kids will take care of you. But if she does hold that grudge her kids are watching. Family is fun.

@@user-lm6me2tz9tmy thoughts exactly. At some point they will might need help.

​@@blackworldtraveler3711 I come from a different culture and country. I still live in my family house (which I inherited) and took care of my father until he died and now I am taking care of my mother. At no point did my parents took out a calculator and went "well, son, you are costing us X amount of money, time to pay rent and utilities and whatnot". When THEY grew old and needed me, I didn't take out a calculator and say "weeeell, I am here 24/7 providing expert care, time to pay me as a full time nurse, caretaker and more". It is not such a novel idea that IF you treat people like family, THEN they will treat you like family too. When you are a kid/teenager/young adult, you live with your parents. When your parents grow old, they live with you. You do not keep tabs. That's the culture here and that's why we can actually have some generational wealth. I saw that video at Ramsey one day about some parents SELLING their house to their kids, forcing the kids to get a loan. What kind of nasty behaviour is that? Of course those children would never even imagine taking care of those "parents".

@@blackworldtraveler3711 YT deleted my lengthier response. Anyway, the point is simple, if you treat your kids like family, they MIGHT take care of you. If you treat them like strangers once they are adults, then they will reciprocate that behaviour later. I saw a video on this channel about some parents that sold their family house to their kids, instead of inheriting it to them. Can you imagine getting a loan to buy your family house? That's not a good society for "generational wealth", by anyone's standards. Meanwhile the rich people keep giving stuff to their kids. Funny how if you are rich your parents don't need to "teach you a lesson about money" eh?

Do you think this helped him "step on the gas" so to speak? The caller essentially paid off her student loans in 3 years, which is pretty uncommon. And I assume this arrangement, while I did think was very strange at first, may have motivated her more than deferred payments and empty promises of forgiveness and blahblahblah that is the norm

Wow. With parents like that, who needs enemies? 😢

@@jacobawojtowicz Firstly, it was a first hand lesson in how interest works, especially compounding interest. Secondly, it taught him that finance costs and it taught him at the same time that savings earn. Interest rates were also at rock bottom when I lent him the money. He was paying me 2.0% above the cash rate on a variable basis. It was a practical demonstration that the sooner you clear the principal, the less interest you have to pay. I also included in the contract that he was to take on no other form of credit while he had a contract with me. While he was contracted to pay "X" per month, I firmly stated that I expected him to clear the debt as fast as was reasonably possible for his own sake. He most certainly did that. He lived like a pauper for 6 1/2 years while he cleared the debt. He didn't even own a car for 5 years of that. He cut his lunch for work and managed his finances to the cent. He's now 26 and has a small mortgage on a quite comfortable apartment in a nice suburb as a consequence of his endeavours. He still doesn't have any other credit aside from his mortgage and he still lives within his means. He recently credited us with the opportunity and the lessons that we gave him. For that acknowledgement, we're going to give him our old Honda Civic when his Mum gets her new car. He still doesn't own a car (or have a car loan!). Hopefully that answers your question, Jacob. It should also answer sfappetrupavelandrei's question, too. "Who needs parents like that"!!!

Nice! That seems fair, and it decreases resentment if the child takes a bit longer to pay it off

@@jacobawojtowicz My first reply got deleted, for some reason. There were a few considerations when giving him the loan. Firstly, it was collateralised. Secondly, it had to teach him a bit about finance. Thirdly, he had to benefit from the loan, not dig himself a hole. There were a number of conditions imposed. Yes, I really do think that it helped him "step on the gas". He kept a book on his own progress and could see with his own two eyes that compounding interest works in both directions. He cleared his debt in record time, figuratively speaking, and has put himself in a very comfortable position financially, for his age. And aside from his current "smallish" mortgage, he's avoided other debt like the plague. He has done himself well. I'm proud of him.

Most people's mortgage lenders charge them $2-$3 for every dollar they lent, and mortgages are the cheapest loans anyone can get.

Parents are different. This sucks

@@frankcb11 There are literal IRS requirements involved with loans of this size amongst family. The parents gave their daughter access to a loan with an exceedingly reasonable interest rate. They did nothing wrong aside from raise a daughter who decided to let her uneducated husband attempt to create a rift in their relationship.

@@TMHFalright

@@TMHFalright it’s not as though the parents can’t be added as a sponsor to her college account and still help her that way. Which is handled differently than loan of this amount. I agree that maybe she should let this go. And the loan was to help her the interest is the thing I am just not a fan that’s all. Not saying she shouldn’t repay her loan

​​@@TMHFNo it's just a cultural difference. In my some families, parents pay for their kids' college. I think most families at least help a little, whether with tuition costs or room and board or whatever. Anyway every family is different. One side of my family is always 10 min early to everything, the other is always 30 min late. They used to be mortally offended by each other. It's normal to have some culture shock when families merge.

She never said she went for 4 years.

College loans don’t start charging interest rates til after so over 3years that’s over 6% and 7 years ago when rates were 1% that’s wild

@@trvpboifetti5006 Yeah, the caller got a raw deal. Interest rates at that time were less than 5%. The caller paid 14.29%.

Yes so 3k or 18k total is 16.66%, if you assume 4 years of college, so 7 year term, is about 4.5% per year

@@HospitalLocksmithnot even that high actually 1.0265^7 is 1.2 so it’s about 2.65% compounded a bit higher if you consider it was being paid back over the last 3 years

Lol that would be a real life lesson

Her parents gave up more than interest. Her parents gave up the opportunity to invest this in an S&P 500 fund and make 10% per year on average.

The Bible forbade the Israelites from charging family interest.

@@rebeccapiamonte That is where I get my convictions as well.

"Just pay me back numerically" sure sounds like a loan to me.

@@bnations2000 That’s in reference to there being no interest *should* I be loaning my kid money. I wouldn’t loan my kid money.

My student loans cost more then double what I took out in the end. It's disgusting. Wish I'd made better choices.

In this case, why don't you think about how much money the parents would have saved if they never had children? Or maybe nobody should have children and we should go extinct if we care so much about money.

@sfappetrupavelandrei Or... It's perspective to help her understand that she wasn't ripped off at all. It was a much worse deal for the parents in every way, and the daughter ended up better off with no debt. They gave her a 2.5% interest loan for 7 years with zero risk...

What are the IRS requirements?

Yes, IRS will actually impute interest for a cash loan and impose taxes on that amount, whether the lender charged any interest or not.

This comment, 💯

@@cherrypieforbreakfast1499 wonder if the parents reported the loan to the IRS.

Nooooo- she was perfectly happy with the arrangement. Her HUSBAND is the one with the problem and she smartly called in to evaluate who's right or wrong.

If the parents don't have the money, then don't give it to the child. What happened with parents giving money without expecting it back? To me, it seems that these parents were too lazy to actually grow their children in great adults and now they don't have any trust in giving them money. You people are horrible parents.

They were right to advise that she's only upset because of the husband's comments. However, they handled the interest question ENTIRELY wrong. They failed to realize that $3k interest on a $15k loan over a seven year period is nowhere near 20%. And I do mean absolutely nowhere near that high a rate. Those parents gave their daughter a GREAT deal.

I'd like to see them charge YOU for rent and adult daycare when you grow older and need them instead. Let's see you will be upset or "enjoy the lesson in economics" ;) And then people wonder why in the USA old people are just "dumped" in institutions. No wonder at all.

If I had kids I will never do this because that will just increase inheritance tax when I die. They should rather put that money in a tax efficient investment account on their name. If it’s to save for university or a house, even better. Then I can even help them out with matching contributions. Not only it lowers my inheritance tax but also encourages savings on their part. I very much prefer not profiting off kids.

​@user-lm6me2tz9t it's not the same at all. Often when people do this it's a .uch lower rent them market value and they have raised their children for 18 years. It's reasonable to try and teach a child to have responsibility and a small step out without having to pay full rent.

@@Sarah-psalm127 Nah, that's just an excuse. If you REALLY want to teach your children financial responsibility why don't you tell them "save X amount of money each month" where X is the "rent" you'd charge them? If your child can save the money, then lesson learned. Why do YOU have to pocket the money your child earns? Care to explain that? ;) Similarly if you want your kid to become a responsible adult, you have the child help you with the chores at home right? But you do NOT pay for that work because you are family. It is that child's house too.

I did something similar. I have the kids one year after graduation to save for down payment/deposits so that they could move out. They didn’t have to pay rent if in college full time. Partial payment if part time student. They all grew up to be responsible adults living on their own. While I can see from the comments that not everyone agrees with you (and me), I wanted you to know that I agree with you. I came to this decision after meeting my husband and his family. His 35year old sister and her kids still lived with mom. Mom was never able to save because her income alone supported everyone. She is now 75 and lives on social security and still has to pay a mortgage.

She's an idiot. Her parents were helping her bypass the b.s. of a loan system and she's ungrateful. And, teaching the cost of borrowing money.

Nope, real parents give the kids money

@@johndone8045 or don't charge interest. Like certain religious groups do.

Well, you are very wrong kiddo

Actually, $3k on $15k is 20% interest. A quick Google search is showing private student loan rates ranging from around 6% - %17. Now, obviously, we don't know what this lady's credit score/borrowing power was OR what the rates were at the time she borrowed, but let's not pretend the parents did her a 'solid'.

You said, "My parents could have sold to another buyer and got their full amount right up front." True. But your parents could have also sold it to you without charging you interest. Just saying, LOL!!

@@GAFB1122 His parents are not obligated to give him $50k. You're assuming they're very rich and/or have no bills to pay, but that may not be true. The $50k might make the difference between being able to sell it to him vs. forced to sell it to someone else instead. Why have your parents not given you $50K??

@@SalisburySnake I'm not assuming anything. I proposed an alternative and it is up the person to reply, NOT YOU!!

@@GAFB1122 it's a public forum, dudebro. Why did you not answer my question?

We have payed double on student loans from interest. 3k was a win for her.

Curious.... if your kids were adults and working, would you let them live at home for free to charge them rent?

@@GAFB1122 with all the tax experts in the comments, that could require taxes too, on the rent paid.

@@GAFB1122 neither

@@mxerb5912 Answer the question!

Or just a 3k contribution.

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Yeah I'd be like, you agreed to it? OK, done deal.

Exactly. Totally agree. Parents used her to make $3k.

You don't know what the parents' situation was, they could've borrowed against credit cards, or early withdrew from their retirement account with a penalty to loan her the money.

@@InverselyComplicated-ve3ls Then they shouldn’t have done that. She could have just got a student loan instead of them going through all that. They charged her way too much in interest. Shouldn’t have charged her anything.

@@KB-sg7tv The interest they charged was less than a student loan.

@@InverselyComplicated-ve3ls That’s simply not true. She paid a whopping 20% in interest. That is crazy! I have four student loans, three of them are between 2-3% interest and the last smallest loan is at 6%. Please explain how the caller paid less in interest than that. And it doesn’t really matter that she took a couple years to pay the loan because the student loan issuers also give you flexibility with your payments and allow you to either start paying late or do various income based repayment plans. And I’m not suggesting student loans are good because they aren’t. I’m just saying, she paid TON of interest for a very short time (took only 3 years after graduating).

Not everyone can afford to give away $15,000. They probably need it to retire.

Actually, it's the opposite. The lender is the slave to the borrower if there are no enforceable documents.

$15,000 is a lot to give with no expectation of ever seeing it again. 😂

you do realize that verse was written in a culture where all debts actually used slavery as collateral, a practice we don't permit anymore right? so setting up a loan with someone does not actually turn them into your slave? and you do know there are lots of verses God commends and expects his people loan and give generously, BOTH, not just one

@@thewheeldeal8439 Do you know that God is imaginary?

@@thewheeldeal8439 yep I'm a history major by training and an avid reader of the Bible and other ancient documents by hobby. You expect to be paid back when you loan money, right? That takes time, effort, and the sweat of your brow (which I'm sure you realize). So while the word "slave" may not be used anymore... the result is only different in that someone owns a piece of your future, to be redeemed either when you pay it back with the fruits of your labor, or when a judge or court says you must and seizes your bank account, or when inability to pay forces you into bankruptcy, which will make things cost more for you in terms of inability to borrow money cheaply and/or security housing easily.... which costs you more time, effort, and sweat than it otherwise would have if you'd paid up front with resources you already had. So... yeah, you win on the technical terms, but the overall premise stands. Borrowing money is a contract on your future earnings which may or may not materialize, and regardless of whether they do or don't, someone else has a legal foothold on your life. Slavery by another name, but slavery all the same. P.S. "Loan" in the Hebrew is used in the same sense as give. Semantics. And I already addressed giving in my OP.

You're also a spirit worshipper, so I'll pass on your advice 😂😇

@@sitcomchristian6886 it wasn’t my advise to you. No one cares what you do trust me.

@@YourTransmissionRepair you accept paying 29.9 percent from thieves

Nailed it.

"shit stirrer" or maybe she just internalizes every minor comment and let's it build in her head. She said he made that comment several years ago. She didn't say he talks about it all the time. It could have been anything from "your parents are terrible ppl" to "eh, I wouldn't charge my kids interest".

Ungrateful? A little. But I'm gonna go out on a limb and say her degree was in neither math nor accounting. The shame is that Rachel and Ken should have picked up on this math dilemma being the financial "experts" they are. I feel another Dave reaction clip coming.

So no problem.