Loans to family 'up by nearly a third'

By Joel Stanier

The amount of money being lent between family members has increased by almost a third in the last five years, according to research by Scottish Widows.

The research found that the average amount of money given or loaned to children or grandchildren is now £12,846.

Borrowing money by traditional means - with a personal loan or a credit card, for example - has become a lot more difficult for some people in recent years, because lenders are more cautious than they used to be.

At the same time, people have become more aware of the potential consequences of borrowing money - meaning some may be more likely to turn to friends and family for a loan before they go to a lender.

A loans expert at Think Money said: "Borrowing from friends or family can be a relatively low-cost and low-risk way of borrowing, because arguably they are likely to be more flexible on things like interest and repayment periods. It also won't affect your credit rating in any way.

"Of course, a loan from a family member is still a debt that needs to be paid back, and as such it's still essential that people only borrow money they can afford to repay. Furthermore, people should consider that failing to repay this kind of loan on time could cause real financial hardship to the family members involved."

Image © iStockPhotos / Jonathan Maddock

Tags: Scottish Widows, loans, loan, family, family loans, loans to family

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