Should I use a TSP loan?
"I don't have experience with TSP in particular, but they look to be roughly the same as 401(k) loans. If the ""G Fund rate"" is equal to the yield of government bonds, then your main risk is the risk that yields increase, which means the interest you're paying is less than what you would have earned on the investments. Here are some other things to consider: For any car loan, I would borrow as little as possible with as short a term as possible.  To me, the interest savings and additional risks from borrowing from your retirement isn't worth it." Never borrow money to purchase a depreciating asset. Especially don't borrow money that has penalties attached.
"I experimented with Lending Club, lending a small amount of money in early 2008. (Nice timing right - the recession was December 2007 to June 2009.) I have a few loans still outstanding, but most have prepaid or defaulted by now. I did not reinvest as payments came in. Based on my experience, one ""catch"" is lack of liquidity. It's like buying individual bonds rather than a mutual fund. Your money is NOT just tied up for the 3-year loan term, because to get good returns you have to keep reinvesting as people pay off their loans. So you always have some just-reinvested money with the full 3 year term left, and that's how long it would take to get all your money back out. You can't just cash out when you feel like it. They have a trading platform (which I did not try out) if you want your money sooner, but I would guess the spreads are wide and you have to take a hit when you sell loans. Again though I did not try the trading platform. On the upside, the yields did seem fine. I got 19 eventual defaults from 81 loans, but many of the borrowers made a number of payments before defaulting so only part of the money was lost. The lower credit ratings default more often obviously, only one of 19 defaults had the top credit score. (I tried investing across a range of credit ratings.) The interest rates appear to cover the risk of default, at least on average. You can of course have varying luck.  I made only a slight profit over the 3 years, but I did not reinvest after the first couple months, and it was during a recession. So the claimed yields look plausible to me if you reinvest. They do get people's credit scores, report nonpayment on people's credit reports, and even send people to collections. Seems like borrowers have a reason to pay the bill. In 2008 I think this was a difference compared to the other peer lending sites, but I don't know if that's still true. Anyway, for what it's worth the site seemed to work fine and ""as advertised"" for me. I probably will not invest more money there for a couple reasons: However as best I could tell from my experiment, it is a perfectly reasonable place to put a portion of your portfolio you might otherwise invest in something like high-yield bonds or some other sub-investment-grade fixed income. Update: here's a useful NY Times article: http://www.nytimes.com/2011/02/05/your-money/05money.html" "The problem here can be boiled down to that fact you are attempting to obtain a loan without collateral.  There are times it can be done, but you have to have a really good relationship with a banker.  Your question suggests that avenue has been exhausted. You are looking for an investor, but you are offering something very speculative.  Suppose an investor gives you 20K, what recourse does he have if you do not pay the terms of the loan?  From what income will this be paid from?  What event will trigger the capability to make a balloon payment?    Now if you can find a really handy guy that really needs a place to live could you swap rent for repairs?  Maybe.  Perhaps you buy the materials, and he does the roof in exchange for 6 months worth of rent or whatever. If you approached me with this ""investment"", the thing that would raise a red flag is why don't you have 20K to do this yourself?  If you don't how will you be able to make payments?  For example of the items you mentioned: That is a weekend worth of work and some pretty inexpensive materials.  Why does money need to be borrowed for this? A weekend worth of demo, and $500 worth of material and another weekend to build something serviceable for a rental.  Why does money need to be borrowed for this? 2K?  Why does money need to be borrowed for this? This can be expensive, but most roofing companies offer financing.  Also doing some of the work yourself can save a ton of money.  Demoing an old roof is typically about 1/3 of the roofing cost and is technically simple, but physically difficult. So besides the new roof, you could have a lot of your list solved for less than 3K and three weekends worth of work.  You are attempting to change this into a rental, not the Taj Mahal." "My biggest concern with this plan is that there's no going back should you decide that it is not going to work, either due to the strain on the relationship or for some other reason.   If you were borrowing from a relative in place of a mortgage or a car loan, you can always refinance, and might just pay a little more interest or closing costs from a bank.  Student loans are effectively unsecured, so your only option for a ""refinance"" would be to get a personal, unsecured loan (or borrow against existing collateral if you have it). You are going to have a tough time getting another 50k unsecured personal loan at anywhere near student-loan rates.   The other negative aspects (overall risk of borrowing from family, loss of possible tax deduction) make this plan a no-go for me. (I'm NOT saying that it's always a good idea to borrow from family for homes or cars, only that there's at least an exit plan should you both decide it was a bad idea)." I've been a P2P Lending investor for ~18 months now with Lending Club with no complaints. Money wise, I'm making a 15.6% NAR w/ ~270 notes. I've had a few late payers, and one couple (oddly enough in both are in law enforcement) declare Ch.13 Bankruptcy, but b/c I've invested as little money as possible into each note ($25/note), my diversification helps reduce volatility and risk to capital.  Having tough underwriting standards is very important, but I think it all comes down to loaning only to those you think will pay you back, not someone with a sob story or a long history of defaults. That might sound like a no-brainer, but if you're a bit of a cynic and have really tough screening criteria, it's possible to lower your default rate if you're patient and deploy your money slowly over time. At least, my returns and default rate of zero would imply it's possible so far. I blog about it quite a bit, so if anyone wants to check out my Lending Club investments thus far, please check it out. (Apologies if this is considered spam since I'm a new member of the site, but thought it relevant to the discussion.) Nope.  If there is no prepayment penalty go for it.  Find another credit source to use (like a credit card you pay off every month) if you want to get a long history. Saving money on interest is more important to me than minutia in a credit score. It may or may not be a good idea to borrow money from your family; there are many factors to consider here, not the least of which is what you would do if you got in serious financial trouble and couldn't make your scheduled payments on the loan. Would you arrange with them to sell the property ASAP? Or could they easily manage for a few months without your scheduled payments if it were necessary? A good rule of thumb that some people follow when lending to family is this: don't do it unless you're 100% OK with the possibility that they might not pay you back at all. That said, your question was about credit scores specifically. Having a mortgage and making on-time payments would factor into your score, but not significantly more heavily than having revolving credit (eg a credit card) and making on time payments, or having a car loan or installment loan and making on time payments. I bought my house in 2011, and after years of paying the mortgage on time my credit score hasn't changed at all. MyFico has a breakdown of factors affecting your credit score here: http://www.myfico.com/crediteducation/whatsinyourscore.aspx. The most significant are a history of on-time payments, low revolving credit utilization (carrying a $4900 balance on a card with a $5000 limit is bad, carrying a $10 balance on the same card is good), and overall length of your credit history. As to credit mix, they have this to say: Types of credit in use Credit mix determines 10% of my FICO Score The FICO® Score will consider your mix of credit cards, retail accounts, installment loans, finance company accounts and mortgage loans. It's not necessary to have one of each, and it's not a good idea to open credit accounts you don’t intend to use. The credit mix usually won’t be a key factor in determining your FICO Score—but it will be more important if your credit report does not have a lot of other information on which to base a score. Have credit cards – but manage them responsibly Having credit cards and installment loans with a good payment history will raise your FICO Score. People with no credit cards tend to be viewed as a higher risk than people who have managed credit cards responsibly. Very smart.  Let other people pay you interest.  Don't pay other people interest.  And, yes, I know it's possible to borrow money from one place and lend it to another place at a slightly higher rate, but why bother. On the face, this appears a sound method to manage long run cumulative interest, but there are some caveats. Maxing out credit cards will destroy your credit rating.  You will receive no more reasonable offers for credit, only shady ones.  Though your credit rating will rise the moment you bring the balance back down to 10%, even with high income, it's easy to overshoot the 8 months, and then a high interest rate kicks in because of the low credit rating. Further, maxing out credit cards will encourage credit card lenders to begin cutting limits and at worse demand early payment. Now, after month 6 hits, your financial payment obligations skyrocket.  A sudden jolt is never easy to manage.  This will increase risk of missing a payment, a disaster for such hair line financing. In short, the probability of decimating your financial structure is high for very little benefit. If you are confident that you can pay off $4,000 in 8 months then simply apply those payments to the student loan directly, cutting out the middle man.  Your creditors will be pleased to see your total liabilities fall at a high rate while your utilization remains small, encouraging them to offer you more credit and lower rates. The ideal credit card utilization rate is 10%, so it would be wise to use that portion to repay the student loans. Building up credit will allow you to use the credit as an auxiliary cushion when financial disaster strikes.  Keeping an excellent credit rating will allow you to finance the largest home possible for your money.  Every percentage point of mortgage interest can mean the difference between a million USD home and a $750,000 one. I would advise against this, answering only the first part of question #1. Borrowing and lending money among friends and family members can often ruin relationships.  While it can sometimes be done successfully, this is most likely not the case.  All parties involved have to approach this uniquely in order for it to work.  This would include your son's future significant other.  Obviously you have done very well financially, congratulations.  Your view for your son might be for him to pay you off ASAP:   Even after becoming a doctor, continue to live like a student until the loan is paid off.   His view might be more conventional; get the car and house and pay off my loans before I am 50.  He may start with your view, but two years in he marries a woman that pressures him to be more conventional.   My advice would be to give if you can afford to, but if not, do not lend.  If you decide to lend then come up with a very clear agreement on the repayment schedule and consequences of non-payment.  You may want to see a lawyer. For the rest of it, interest payments received are taxable. Possible? Sure. The question is where do you plan on going to get the money and how well can you shop around to find the best rate for the loan. Banks and credit unions would be one option but I'd be curious as to how well do you know the various routes you could take. "I have personally invested $5,000 in a YieldStreet offering (a loan being used by a company looking to expand a ridesharing fleet), and would certainly recommend taking a closer look if they fit your investment goals and risk profile. (Here's a more detailed review I wrote on my website.) YieldStreet is among a growing crop of companies launched as a result of legislative and regulatory changes that began with the JOBS Act in 2012 (that's a summary from my website that I wrote after my own efforts to parse the new rules) but didn't fully go into effect until last year. Most of them are in Real Estate or Angel/Venture, so YieldStreet is clearly looking to carve out a niche by assembling a rather diverse collection of offerings (including Real Estate, but also other many other categories). Unlike angel/venture platforms (and more like the Real Estate platforms), YieldStreet only offers secured (asset-backed) investments, so in theory there's less risk of loss of principal (though in practice, these platforms haven't been through a serious stress test). So far I've stuck with relatively short-term investments on the debt crowdfunding platforms (including YieldStreet), and at least for the one I chose, it includes monthly payments of both principal and interest, so you're ""taking money off the table"" right away (though presumably then are faced with how to redeploy, which is another matter altogether!) My advice is to start small while you acclimate to the various platforms and investment options. I know I was overwhelmed when I first decided to try one out, and the way I got over that was to decide on the maximum I was willing to lose entirely, and then focus on finding the first opportunity that looked reasonable and would maximize what I could learn (in my case it was a $1,000 in a fix-and-flip loan deal via PeerStreet)." As most people said, family loans are dangerous to the relationship.  The lender should not lend more than they are willing to forgive, and the borrower should not borrow more than they are very certain they can repay. I would suggest a few things to consider: Anecdote: I borrowed some money from my grandfather when I graduated from college to help with cash flow for an apartment, vehicle, etc.  It was about 5% of my starting annual salary and I paid it back quickly and with interest. The answer to your question depends on your answer to this question:  Would you be willing to take out a loan at that interest rate and invest that money straight into stocks? That's basically what you're planning to do. You leverage your stock investment, which is a valid and often used way to improve returns. Better returns ALWAYS come with more risk. Depending on your location there might be a tax advantage to a mortage, which you can take into account. If you're able to pop this data into excel you can quickly calculate the solution. Every one of these problems boils down to 'Interest Rate', 'Term', 'Payment', 'Present Value', and 'Future Value' (FV will typically be zero). Excel has a formula to calculate any of these components based off of the other inputs.   In this case, the given information is: Interest Rate: 7.56%  Term: 36 Months Monthly PMT: $350 Present Value: ?   You can use the =PV() formula and input the other known values. One caveat is that you'll need to adjust the interest rate to account for the monthly compounding. So, the formula would be =PV(.0063,36,-350). This gives a result of $11,242, which is the amount you'd be able to borrow. [All of these can also be solved on the TI-84+, but I don't have my old calculator on me to walk through the steps]  To calculate the total interest paid, you would then find out how much you'll be paying over the life of the loan. If your monthly payment is $350 for 36 months, the total amount you'd pay is $12,600 ($350*36). Subtract the $11,242 calculated in step one, and you are left with $1,358 worth of interest.   Hope that makes sense. Let me know if you want me to go over any of the steps in more detail. As a former finance student, I would highly recommend locking down the TVM functions, as they will pop up quite often throughout your schooling/career.   Best of luck! I don't know much about how student loans work, so there might be some caveats (e.g. does the interest rate stay constant, do you get a discount if you pay off early etc.). Ignoring those caveats: The interest on you student loan looks quite small. Depends a bit where you are in the world, but it seems very likely that you can get more interest than that on a 100% guaranteed investment form, e.g. term bank deposits. So, it seems a no-brainer to not pay back you student loan and invest the money securely for a higher interest rate instead. Similar situation when you think about taking the money as a down-payment for a house. More factors come into play here: