1. Besides the point, but I hope Mr.M realizes that even paying a simple interest of 13% over 5 years means he has paid up 3.25 Lakhs interest. In another 3 years he would have paid 5.2 Lakhs in interest to get a “free lunch” of 5 Lakhs.

  2. Hi Subra,
    Relatives when they come for money, they will be in urgent situation or in desperation. That time, if we are ready to help then they will not wait for the documentation and registration and all. SO in that case, we end up giving money on the word promise.

  3. @andy, Nice calculation and after reading your comment I also thought about it. It is given in the story that he has the cash but not intentions to re pay. Now we can assume that this cash is earning him 9% interest (not difficult today) so he is effectively paying only 4.5% to his uncle which makes his cost of Capital for 8 years is Rs. 1.8 Lacs & not 5.2Lacs. So he can pray some more years for his uncle’s Moksha….

  4. Even with all that writing, guarantees from relatives, cheques for principal/interest, some relatives do not repay/ are not able to repay. In that case would we go to court to claim ?
    Would it be better to lend money that we don’t mind losing ?

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