The letter must clearly state a “loan contract” in order for it to have legal value. The use of this formal mandate would also make the agreement serious. The borrower will also understand the seriousness of the agreement and will endeavour to stick to it. Finally, ask your friend to sign the agreement and give him a copy. The signature must be attested before a notary. You can also design the agreement by specifying your full name and residence address, such as this example. Acceleration – A clause in a loan agreement that protects the lender by requiring the borrower to repay the loan immediately (both principal and accrued interest) if certain conditions occur. When the loan was originally applied for and you agreed to the terms, you knew the situation could be negative. Even if you have taken your friend or family member to court for their credit, you still can`t get everything that was originally loaned.
If there is no written agreement on the loan, you cannot get any of the loans. You must be aware before accepting the loan. There is always a risk that the money will never come back. Like traditional private lenders and banks, they must also accept that no matter how much they seek and try to get their money back. If the lender wants to separate the loan from a gift, there is a minimum interest rate. This minimum should be charged to allow the IRS to distinguish between a gift and a loan. Your family member or friend may choose to calculate at least this minimum rate. This generally ensures that the loan is considered a loan. Both parties must sign and date the formal document, if possible, with a third party witness. The witness does not need to be a friend or family member. In fact, they should preferably NOT have a relationship with both parties.
In addition, you can suggest that your friends or family use an online lender service that can help them find the right credit for their needs. Loanry helps you find personalized offers based on your credit ratings. All lenders are selected by our partner Fiona, and we will only connect you to those who can lend you money based on your credit score.