A loan agreement is a legal contract between a lender and a borrower that defines the terms of a loan. A credit contract model allows lenders and borrowers to agree on the amount of the loan, interest and repayment plan. In this brief guide, we discussed what should be in a family credit contract and provided a free model for family credit agreements. However, you should seek independent legal advice. Use this document if you need to register the loan but you have a high degree of confidence in the borrower. A lender can use a loan contract in court to obtain repayment if the borrower does not comply with the contract. This agreement was signed and dated on the day of this agreement, it depends on you as a lender – how much you are willing to borrow and how much your family needs. Always remember to treat a loan to a family member as a business transaction. The family loan is an agreement between marital or bloody relations, one party acting as a lender and another party, the borrower. As a general rule, the person who lends money must pay an interest rate.
As a lender, take the interest rate in your family credit contract to clarify things. A family loan, sometimes called an intra-family loan, is a family loan. It can be used by one family member to borrow money or borrow it from another, or as a means of transferring capital – the end doesn`t matter. It is just a loan that does not use a bank, a credit union or another traditional lender that is outside the family. The use of a loan agreement protects you as a lender because it legally requires the borrower to repay the loan in regular or lump sum payments. A borrower can also find a loan agreement useful because he spells the details of the loan for his files and helps keep an overview of the payments. Look for each provider and ask what services they can offer and what services they can`t offer before you sign an agreement. They can also work with local lawyers and companies that offer similar services. Do you want to include guarantees in the loan? It could be a car, a house, jewelry, etc. In many cases, family credit is a success – but success requires a lot of conversation and open planning. You have to deal with administrative issues and the emotional (perhaps more complicated) side of things.
You also need to navigate through potential financial and legal pitfalls. You should establish a great payment plan and a credit plan that works for you. If your family or friend doesn`t agree with the schedule, don`t lend them the money. If the borrower dies before repaying the loan, the authorities will use their assets to pay off the rest of the debt. If there is a co-signer, it is their responsibility for the debt. However, it is important to note that family credit contracts are completely unsecured, since the person lending the money is a family member or close friend. This means that there are no assets as collateral in case the family member does not repay the money. So how can you get your money back if the family member or friend doesn`t respect the agreement? Well, the only solution you will have is to go through a lawsuit or a small appeals court.