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How would you handle loan requests from India?
Posted: Tue Nov 13, 2007 7:14 am
by tejasvee
You are an NRI. A slightly distant family member, whom you know well for decades asks for a x-lakh loan for a purchase of a property.
You have x-lakhs, but not sure what to do here. You are sitting in US of course.
I am in that situation. I want to give a little less than x lakhs, but don't know how to proceed. What are my options?
Should I give directly without consulting immediate family in India?
Should I give with a simple agreement? If so what kind?
Should I give through my folks in India?
Any conditions like timeline to be talked upfront?
Please share what you would have done in this case.
How would you handle loan requests from India?
Posted: Tue Nov 13, 2007 7:29 am
by Lakshya
We had same situation in our family few months back, where guy lost big money in stock mkt and was looking for loan to repay. Most of the members disagree. I guess its depend on salutation, how close you are with that relative, For property I wold keep myself available up to my first(close) cousins.
Always good to check with immediate family members.
How would you handle loan requests from India?
Posted: Tue Nov 13, 2007 4:58 pm
by dbs
It obviously depends on the particular situation.
Unless you have full faith in the realtive (NO. since you are asking the question) or you are prepared to loose it all, you can follow a middle path.
One way out could be to put in a fixed deposit and allow him to take out a loan against gaurantee of the FD from the bank. Bank would do the due diligence for the title and valuation of the property. It would be mortgaged to the bank.
How would you handle loan requests from India?
Posted: Tue Nov 13, 2007 5:25 pm
by tejasvee
dbs;57297One way out could be to put in a fixed deposit and allow him to take out a loan against gaurantee of the FD from the bank. Bank would do the due diligence for the title and valuation of the property. It would be mortgaged to the bank.[/quote]
The loan asked from my side is just 8% or so of the property. So they are taking loans from multiple sources. I doubt the FD approach works.
Lakshya - This is second level of cousins (parents of each were cousins) transaction. Ok. I will check with the folks once anyway, but not sure if they can provide any solution other than give it (they have more trust)
How would you handle loan requests from India?
Posted: Tue Nov 13, 2007 10:07 pm
by MadMax
I would say give it through your folks. That would force some kind of accountability in the future. Tell them you have rupees parked in your parents account or something.
If they insist on not involving your folks, then dal-me-kuch-kaala hai. Happened to us once. Also, we didn't lend them the 100% they asked, more like 60%. It was not a huge amount, but it is gone now for all purposes.
How would you handle loan requests from India?
Posted: Tue Nov 13, 2007 11:38 pm
by moreqa
Ask yourself what a banker or other lender would ask - do they have Character, Capacity, etc., to repay your loan?
Did they tell you how they will repay?
Did they offer you they will pay you interest which you are currently getting from your deposits?
Good idea to let more of immediate family know about this transaction (not others - otherwise you might be posting the same question for more loaning).
If you are needing this money back, get a legal note as well. Tell them that that is what you do whenever you lend to someone.
What would be your course of action if they don't pay the promised interest and/or principal on time?
Can you place lien on the property itself to indicate that you are a lender of such and such amount?
Can you get post-dated checks for repayments? (say that that is what you do when you lend, though you don't lend often).
You may opt to lend them just before registration, so that the money is not idle in their hands - somehow idle money drains out to unknown sinks and excuses.
How would you handle loan requests from India?
Posted: Wed Nov 14, 2007 12:35 am
by cnu
At the upfront,
if you can give and it wont hurt you - why not
if you can give, it will hurt you a little - offer him 4% if he asks 8%
if you can give, if it can cause dent in ur savings or hampers your progress --> Dear Cousine, Its going to be tough, but let me know if you badly badly need it
if you can give, but dont wanna give, say politely no --> Dear cousine, I burnt my finger before and lost of my savings, dont wanna repeat it [a white lie]
if you cannot give -> plain Sorry!
How would you handle loan requests from India?
Posted: Wed Nov 14, 2007 1:27 am
by idli-vadai
How would you handle loan requests from India?
Posted: Wed Nov 14, 2007 1:47 am
by MadMax
I had a question, if you give some money to your friend/relative in India...not as a loan...but to help him out...can you claim it as charity in your US tax returns?
How would you handle loan requests from India?
Posted: Wed Nov 14, 2007 2:01 am
by Bobus
MadMax;57424I had a question, if you give some money to your friend/relative in India...not as a loan...but to help him out...can you claim it as charity in your US tax returns?[/quote]
A necessary (but not sufficient) condition for a contribution to qualify as charitable deduction on US tax return is that the contribution shd be made to a qualified organization - qualified by IRS.
http://www.irs.gov/publications/p526/ar02.html#d0e454
Extract
Organizations That Qualify To Receive Deductible Contributions
You can deduct your contributions only if you make them to a qualified organization. To become a qualified organization, most organizations other than churches and governments, as described below, must apply to the IRS.
Publication 78. You can ask any organization whether it is a qualified organization, and most will be able to tell you. Or you can check IRS Publication 78, which lists most qualified organizations. You may find Publication 78 in your local library's reference section. Or you can find it on the Internet at apps.irs.gov/app/pub78. You can also call the IRS to find out if an organization is qualified. Call 1-877-829-5500. (For TTY/TDD help, call 1-800-829-4059.)