I want to offer my friends something that works similarly to CDs. Although I would not call myself a "bank" or "depository institution" I would be paying them interest on what they give to me.
Is this legal? Of course, I know *loaning* is illegal unless you're a chartered bank, but I'm not loaning money or charging interest. I'm simply making their money grow with a new type of financial instrument (that works pretty similarly to a CD).
Since nobody's ever heard of this financial instrument, I'm clear, right?
2007-09-15 16:04:35 · 3 answers · asked by Anonymous in Business & Finance ➔ Credit
Loaning someone money isn't illegal - go to www.prosper.com and see lots of personal lenders and borrowers.
You can write a contract, have everyone sign it, and accept the liabilities.
2007-09-15 16:20:03 · answer #1 · answered by Anonymous · 0⤊ 0⤋
If you do this publicly, is would be illegal. Among the pile of legal issues, you are not FDIC insured.
But if your friends are silly enough to give you their money so they can earn interest, its fine. It's basically just a loan between friends. They are loaning you money and you are paying them interest for it.
This sorta thing ruins friendships.
2007-09-15 16:10:32 · answer #2 · answered by Mike 6 · 0⤊ 0⤋
Where are you getting the money to pay them interest?
2007-09-15 16:10:32 · answer #3 · answered by bdancer222 7 · 0⤊ 0⤋