Family and friend loans seldom repaid, says survey

Kind-hearted lenders typically advance more than £2,000 to family and friends in informal loans, many of which will never be repaid.

The average person will lend 2,250 to people they know during their lifetime, according to More Than Legal Services.

But 40 per cent of people who have borrowed money from a friend or family member said they would not be able to afford to repay the cash, while 24 per cent admitted they had no intention of ever paying it back.

A third of people who have lent money said the loan had caused rifts that may never be repaired, although 70 per cent said they thought disputes could have been avoided if they had drawn up a contract for the advance.

A third of parents said they had dipped into savings to lend money to their children, while 12 per cent said they had taken out a loan themselves in order to help out offspring and 8 per cent had run up credit card debt.

Matt Pernet, head of legal services at More Than, said: "People will often turn to those closest for borrowing, but, as our research shows, it can turn into a great source of tension for families and friendships. This can often be prevented by laying out clear terms for repayment."