A personal loan agreement form is written an agreement for loan transaction between two parties. This agreement is usually used by relatives, families or friends that include the date, the date of payment of the loan as well as interest if it is available. When you are using this document, your agreement will be formalized so both parties will understand the responsibilities and right. Anyway, this is a great way to protect both parties from a possible dispute in the future.
How To Write A Personal Loan Agreement?
This is essentially a legal document which is also popular as the “promissory note”. If you want to make your own personal loan agreement form, you can download our sample which is also easy to customize. You can download it for free and learn many points from there so you will know what to include in your agreement. After you finish with your draft, you can ask both parties to make sign it.
What To Include In The Personal Loan Agreement Form?
Just like other contracts, the personal loan agreement should include some aspects such as the information of both parties, interests requested, date of the payment, consequences for late payment, the amount of loan needs to be repaid, the signatures of both parties.
To make the agreement strong, usually, a witness is included, which is from the third party such as an attorney to make it notarized. These options are up to you actually. If the amount of the loan is quite big, using an attorney to make it binding is wise. But if you trust the lender because the individual is from your family, you can use the signatures only. It depends on the situation and the relationship between both parties.
What Will Happen If I don’t Formalize My Personal Loan Agreement?
There are some consequences related to the loan agreement. These depend on the term and condition stated in the contract. Typically it is the same with a bank which the lender can seize the assets you offered as the collateral. The lender can also sue you in the court.
So, considering that money ruin your relationship, using an agreement will avoid you from disputes in the future. We never know when the conflict will arise so having a written contract will avoid both parties from misunderstanding.
For a person who is lending the money, the agreement will avoid them from conflict due to sudden high interest. The individual can refuse because it is already stated in the document.
When Do You Need A Personal Loan Agreement?
Whenever you have a personal loan with someone like friends or family, the sample of the personal loan agreement is a good thing to start. You can learn the point from the sample we provided on this page. Besides, you can customize the sample and edit it as you wish.
We never know that we will have frictions with the loved ones due to money. So, having a legal document that explains your loan transaction is the best way.
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