ABC Reiew
Family loan funds, one of the better ideas we’ve seen in personal finance in a long time, is the focus of a series of articles in the New York Times.
In such plans, members of an extended family contribute to a fund from which any family member can borrow. Some funds offer interest-free loans. Others offer loans at modest rates. But all of them have a particular advantage over bank loans — a sense of personal accountability.
The lack of loan defaults may have something to do with the smaller loan amounts. But there may also be something psychological in play here, too, given that if you don't make good on your debt, you're stealing from the entire family and everyone may find out about it.
We’d urge you to read the entire series. And although it’s unlikely your family offers such loans — they are a very rare phenomenon — future generations would look back on you fondly if you started one now. So get on Facebook and contact your siblings and cousins.
Or, if you just can’t stand your family, you may want to consider a kye — the loan pools popular among immigrant Korean entrepreneurs.
Family Loan Funds Offer Cash and Accountabilty
