Suppose you are going to borrow money to buy a house or for another purpose from a family member. If the loan is over 10k, the IRS has a minimum rate you must charge which is the AFR. Rates are posted on their website and vary from month to month and by the term of the loan. Although you have to legally charge interest on a family loan, the minimum is very low right now. The lender can charge more if they want to but it is not required for tax purposes. Check online to see what the current minimum rates are.