Each week the New Zealand Herald and Newstalk ZB's Cooking The Books podcast tackles a different money problem. Today, it's what to stay alert for if you lend money to family. Hosted by Frances Cook.

There's an old rule that says don't lend money to family, or friends that you're particularly fond of.

Money is a weird thing, and it can change the relationship in ways you never expected.

Maybe the person who borrowed doesn't pay it back, opening up a can of worms. Or the two sides have different expectations about how quickly it's paid back.


Then you have the thorny problem of a loan from parents to a child, and a different sibling getting jealous about perceived favouritism.

It's a thorny issue alright, but there's also a reason why people keep doing it.

Money makes the world go round, and if you're wanting to buy a house or start a business, you'll need some of it. If you don't have enough of your own, then family who can help will almost always cut you a better deal than the banks.

It's just this issue which credi.com wants to help with. It's an online process to get everything written down and formalised when you're loaning money between friends and family.

It's launching here in New Zealand this month, and if it gets a response like it has in Australia, it'll do well.

So, there's obviously a lot of people mixing money and family.

I called Herald personal finance writer Diana Clement about the biggest issues people needed to watch, if they were getting into this situation.

We talked about the pros and cons of lending to family, the horror stories that can become reality, and other options for when lending isn't a good idea.


For the interview, listen to the podcast.

If you have a question about this podcast, or something you want covered next time, come and talk to me about it. I'm on Facebook here, and Twitter here.

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