Lending money yourself
"Treat loans to adult children as you would loans to any other person," Martha Nichols says, speaking from the experience of not having loans to her children repaid. "Have it all signed and sealed. Include a copy with your will at your solicitors."
Guaranteeing loans
You may be asked to act as guarantor for a family member who wants a loan. As guarantor, you'll have to repay the loan yourself if the other borrower can't.
Mike Andahl thought being a guarantor was "just a formality" and was something "people do all the time". Andrea, who'd asked for his help, promised she'd refinance the loan after three months, so his guarantee would only be needed for that period. Mike didn't seek legal advice.
When she didn't refinance the loan, Mike felt very vulnerable. His home had become security for a debt of $25,000, including interest and charges, which he couldn't repay. Mike says he didn't understand what he was getting into.
Think very carefully before acting as guarantor, and talk to an independent lawyer. Make sure you see and understand all the details of the loan. Don't use your home - or anything else that you aren't prepared to lose - as security. And insist on the borrower getting budgeting advice about their ability to handle the loan responsibly.
Read what our members have to say close
To save money on essentials and make buying decisions easy, you can't go past Consumer. We're proud to have over 65,000 members all enjoying our independent information online or in Consumer magazine.
Here's what some of them say...
"Just wanted to let you know that I find your site excellent! Easy to find my way around, everything at my fingertips - just a click away.
I only took out a 3 month membership as I wasn't sure but it is actually really easy to use and if I want it on paper I can print the
reports. Thanks again".
Denise Watkinson - Waitakere
"My mother (74) got a renewal letter from her insurance company for her car insurance, wanting $570. After reading
your article on car insurance, I contacted one of the companies you recommended, who quoted her $318 for the same
level of cover. I just wanted to stay thank you very much for your article, as it has saved my mother a substantial amount of money".
Adrian Lane - Kapiti Coast
"I've been a member to the magazine since 1997 and enjoy reading it a lot. I've found lots of helpful information on different issues...
Thank you for being so helpful".
Peter Kovalenko - Porirua
"I have been a member of the Consumer NZ for 20 or more years and have enjoyed much reliable advice.
I turn to their tests before making significant purchases".
Lyndal Print – Auckland
Join Consumer now and make your decisions easy on a huge range of products and services
- Over 500 reports, plus interactive tools and calculators
- Independent advice from NZ's trusted source of information
- Join over 65,000 members who help us get all NZers a fairer deal
from just $28
Previous: What you can do
