Hi,
I owe 25K on 2 different credit cards- paying 10% interest.
My brother was asking me the other day where he should put money to get a decent return. Best he can get is about 3% or maybe a little more.
Then he came up with a suggestion. He could lend me the 25K, I pay off my credit cards and pay him a rate of 4%. Then there is the possibility that he may not have to pay DIRT(or maybe he does?).
Anyway I am happy to pay him 1% more than he would get in the bank.
Just a bit confused with working it out practically. I was going to pay him back E500 a month and to make it easier I was going to pay the entire years interest in advance and again at the start of following years- (assuming that I will have it paid off in 4 years or a bit more).
Now if he had it in a bank he would get 4% of 25K every year for 4 years but I will be paying him 4% on the reducing balance. When i pay him E500 every month he can put that in his bank and earn 3% on it. So I don't want to screw him and I'm confused with the figures. Is this a win win for the 2 of us? What effective interest rate will he be receiving? And does he have to pay dirt? And are there tax implications for me with my brother lending me the money?
Many thanks
nbc
I owe 25K on 2 different credit cards- paying 10% interest.
My brother was asking me the other day where he should put money to get a decent return. Best he can get is about 3% or maybe a little more.
Then he came up with a suggestion. He could lend me the 25K, I pay off my credit cards and pay him a rate of 4%. Then there is the possibility that he may not have to pay DIRT(or maybe he does?).
Anyway I am happy to pay him 1% more than he would get in the bank.
Just a bit confused with working it out practically. I was going to pay him back E500 a month and to make it easier I was going to pay the entire years interest in advance and again at the start of following years- (assuming that I will have it paid off in 4 years or a bit more).
Now if he had it in a bank he would get 4% of 25K every year for 4 years but I will be paying him 4% on the reducing balance. When i pay him E500 every month he can put that in his bank and earn 3% on it. So I don't want to screw him and I'm confused with the figures. Is this a win win for the 2 of us? What effective interest rate will he be receiving? And does he have to pay dirt? And are there tax implications for me with my brother lending me the money?
Many thanks
nbc