Personal loan agreement – Negotiate a loan with friend or family member in any degree, can be a great alternative to form capital for investment or simply to get money to accomplish something of the self-interest of consumption.
On the other hand, formalizing this type of personal loan in the right way, ie drawing up a loan agreement to legalize the business is by no means hostile – on the contrary, it is the best attitude to keep things in place. Formalize the terms and conditions of the loan making it clear all aspects, it is great to protect even the relationship.
Personal loan agreement
A well-written personal loan agreement is critical to ensuring that your financial transaction does not encounter conflict points if the money is not returned if the borrower or the lender tries to change the rules in the middle of the game or in case they need to sue.
The doubts on the subject are many, we list some in the list below just so you have an idea, we will not answer all but the ones that are currently possible. See the questions:
- how to officialize a loan made to a relative?
- How to write a personal loan agreement?
- How to make a cash loan agreement?
- How to write a loan agreement between individuals?
- How to create loan agreement between individuals?
- How to write a legal document to lend money?
- How is the model of money loan agreement between friends?
- Is there a model of mutual loan agreement?
Why choose a loan?
Who has no money wants to borrow and who has money left over wants to borrow. So a personal loan can have many advantages for both parties. The claimant gets the funds he needs and avoids the bureaucracy and high interest of private lenders.
The lender earns interest greater than those paid on savings or traditional applications and still has the satisfaction of helping a friend or relative – however, interest payments must be compatible and regular installments. In today’s low-interest living environment, even a reduced interest personal loan can provide more financial return than many investment applications.
Our advice? Do not borrow more than you need and you can pay with dignity. If you are the lender, do not lend more than you can lose, particularly if there are no guarantees that can be avail in a dispute, especially if the taker is not someone you would like to sue.
You do not want a personal loan between you and the other party. ” Personal loan contracts are there to help ” maintain order and decency, end the mess and the uncertainty of doing everything wrong in the financial transaction, because it does not have fiscal or legal support.
The interesting thing is that you do not need to be a lawyer to write a personal loan agreement. However, depending on the level of complication involved in the loan agreement , you may want to hire a legal expert to help you with the more complex details of the loan agreement.
If you want to follow the DIY approach (do it yourself), here are some basics to include in your document:
Basic terms of the loan agreement
A personal loan agreement needs to be clear and objective in its basic principles. Who are the parties to the loan agreement? How much is being loaned? What is the interest rate? What is the duration of the loan term and when will the payments be repaid? These tips are the backbone of the loan agreement you need.
If you are the borrower in the agreement, and want a low interest rate that will help you with repayment payments – negotiate what can be done. If you are the lender, negotiate an interest rate that at least allows you to beat inflation, also define the date of each month that will be made the payment of the installments.
Define the conditions and penalties of the contract
Once you have defined all the basic terms of the loan agreement between individuals, you should resolve some contingencies of the type – what happens if the borrower can not return the monthly payments? What is the guarantee that the lender can make use of? What is the penalty for late installments? Is it possible to renegotiate the amount of the installment or the interest rate down in case of difficulties? Are there penalties for discharge or anticipation of installment? Make a well-explained personal loan.
It is important for both to work together to find out the answers to these questions. After all the agreements are agreed, put everything in writing and make sure nothing is left out and all the specifics are clear.
Automate your friend’s loan repayment
You have completed the details of your personal loan agreement, and both have signed and dated the document, it may be a good idea to register in a notarized notary’s office and all that is entitled. Formalized everything? Now it’s time to set up payments automatically. This, if you are the contractor, this is not to forget to make your payments.
If you are the lender, the setting of the payments being automatic means that you will not put yourself in the strange position of having to charge your friend or relative to pay the money owed to you. Automatic payments allow the loan to go its way perfectly until the end.
Contract of mouth or handshake
If you think you can seal a personal loan agreement just by giving the word of mouth or with a simple handshake, then your luck is sealed. You will probably have better footwear if you formalize the financial transaction by creating a specific contract to lend money legally and at interest.
Be sure to cover the basics in your loan agreement and be sure to include the forecasts for some bad scenarios.
Well, once both parties have signed the agreement, you can focus on keeping your relationship friendly without having to worry about the loan loaned to the friend or relative.