Lent my mate 10k

In other words, you are looking for volunteers to take a compounded 7.5pc loss for 4 years (real inflation 10pc minus official inflation of 2.5pc) as well as take all the risk that you're mate might not pay back.

Where's the cue, I want to sign up.

Oh wait, I re-read your post, I think *YOU* are the volunteer.

Typically these things are sorted out BEFORE you lend the money, not at the end of the term. You must be rich if you are so loose with ten Gs. Either that or your mate must be stunningly good looking.

12k would be fair imo

He's a mate, I trust him 100%, he needed the money. I thought inflation was fairest rate as I didn't want to profit in any way. Calculation isn't that easy and not sure which rate to use. I simply want to know what a fair amount would be for the sake of argument.

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http://www.hl.co.uk/news/inflation-calculator

RPI inflation calculator above says £10k in Sep 2008 is now worth £11,085

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http://www.whatsthecost.com/cpi.aspx

There is a CPI calculator here but it only goes to 2011. However, using the list of historical annual rates from 2009 and counting 2012's rate as 2.5% (Augusts reported annual rate) gives a figure of £11,275.

For what its worth, I think real inflation is much higher than that and I would say the higher figure is a VERY good deal for your mate - it would be approx equivalent to your return in a savings account paying 3%.

A quick search shows the cheapest general unsecured loan for £10k over 4 years is about 5.7% which equates to a repayment of £12,482 (if payed back in one go at the end of the term).

Superb. Thank you very much for your time.