Are Czechs willing to give a car loan to a relative?
In the Czech Republic, family lending has traditionally been a common method of family financial assistance. Usually it is convenient only for the borrower, because he does not have to pay fees and large interest on the loan. The creditor is no longer so well, because in a family environment, relationships and “calm” are often preferred over the recovery of bad debts from relatives of borrowers. And that bad debts are not enough in families! What other findings arise from a family loan survey conducted by one of the Czech banks?
No interest, no liability and even no contract
Unbelievably, over 80 percent of people who participated in the family loan research said they were lending to the family member interest-free, without any guarantees, and most importantly without any contract that would prove the borrowing of money and the resulting debtor’s obligations. We Czechs are willing to lend to children, most often in the form of a car loan, even 200 thousand – and completely without a contract. The willingness of parents to lend children just for a car is higher than for loans for other purposes (perhaps because parents hope that children will visit their parents more often …)
A large proportion of creditors have therefore lost their money in family lending
If the money was lent without any contract, it’s no wonder that more than a quarter of the survey participants lost their money. Either part of the loan or even all the money borrowed. On average, according to this survey, the loss of non-repaid loans is 180 thousand crowns per creditor. And that’s a big hole in the family budget!
Another finding is the low willingness of creditors to solve their claims officially. On the one hand, debt is difficult to prove without a contract; According to the survey, only 9 percent of people decided to claim their claims.
Another 54 percent of non-refundable creditors said they tried to deal with the situation in person, purely in private. And as many as 27 percent did not try to solve it at all.
Even after disappointment we are willing to borrow again. We’re just more careful
Most of the people who did not return the money from the family loan said they would lend again. Just for the second time, they would ensure the writing and signing of the contract, as well as clearer repayment terms. Respondents also stated liability as one of the forms of conditions for granting a family loan, especially if it was a loan for the purchase of a car.
And to whom are we most willing to lend?
In the ranking of trust, parents or mother lead. Right behind her is her father and then her children. Among cousins, cousins and uncles and aunts do the worst. Those interviewed were least willing to give any amount, let alone a larger car loan.