Do you consider possible changes in your circumstances – would the money lend enough of a buffer? Depending on the amount of money borrowed, the lender may decide to have the agreement approved in the presence of a notary. This is recommended if the total amount, the capital plus interest, is more than the maximum acceptable rate for the small claims court in the jurisdiction of the parties (usually 5,000 usd or 10,000 USD). The borrower agrees that the borrowed money will be repaid later to the lender with interest. In return, the lender cannot change its mind and decide not to lend the money to the borrower, especially if the borrower depends on the lender`s promise and makes a purchase in the hope that it will soon receive money. After approval of the agreement, the lender must pay the funds to the borrower. The borrower will be tried in accordance with the agreement signed with all sanctions or judgments against them if the funds are not fully repaid. Has a friend, relative or colleague borrowed money from you? Read our article with smart strategies that will help you get your money back. You will find a specific model agreement for lending to friends or family in our library. It accounts for the need to be formal enough for the borrower to know that the loan is not a charity with simple language, so that the agreement does not seem “exaggerated” in the situation where the lender and borrower know each other well. Use the LawDepot credit agreement model for business transactions, student education, real estate purchases, down payments or personal credits between friends and family.
The letter is intended to protect both parties who enter into the agreement. It is best to have legal proof of who borrowed the money, when they borrowed it, and specific terms of repayment. The legal proof of all parties protects the bank accounts of one of the two parties as well as the friendship. If you are considering borrowing money from friends or family, this article explains what you should keep in mind and how to increase the likelihood that your loan will be repaid. Sometimes, in these situations, “the borrower” is really looking for a gift and doesn`t really intend to repay. It may not even be a conscious decision on their part, but it is important to be aware of it. You might even decide that you want to make a gift (perhaps a smaller amount) avoid the bad feelings and potential complications associated with a loan – but both parties should be aware of the decision to make a gift and why. If you have to borrow money from a friend, it is best to put aside your friendship and simply consider it as a business contract with friends and design an official money loan contract with all the details surrounding the transaction. Interest (Usury) – The costs of borrowing money. An agreement generally defines the terms of the loan, in particular the amount to be loaned, the interest rate, the date and duration of the loan, the frequency and value of the repayments, all the guarantees used to insure the loan and the conditions under which you can sell or take possession of the guarantee.