Contract Template For Lending Money To A Friend

Borrower the individual or company receiving money from the lender which will then have to pay back the money according to the terms in the loan agreement.

Contract template for lending money to a friend. The family loan agreement is a document that is made between relation by blood or marriage with one 1 acting as borrower and the other a lender. And a written agreement can clearly spell out all the what ifs that might blow up down the lending road. Wouldnt it be better to do this as a rental agreement rather than a loan agreement. Is lending to friends or family a good idea.

As much as youd like to leave it to trust and friendship a formal contract is the way to go. Collateral an item of worth such as a house is used as insurance to protect the lender in the event the borrower is unable to pay back the loan. The best solution when loaning money to a friend. If youve already loaned money and are having a difficult time collecting payments see how to collect personal debt from a friend family member or a business.

Its good to trustits your mom or aunt millie after allbut trust us treat it like a business and create an agreement. Lending money to friend or family is only a good idea if you can afford it and you know you will get your money back. Iou form an iou agreement is a step above a handshake agreement. You may just want to help someone you care about avoid high interest charges when loaning from a bank.

You buy the laptop and retain title over it your friend agrees to rent the laptop from you for the sum of x per month until such time as rental charges paid amount to the purchase price of the laptop after which the title to it passes to your friend. If you must borrow money from a friend its best to put your friendship aside and simply think of it as a business deal among friends and draft an official money loaning agreement with all the details that surround the transaction. For tax purposes you must include the interest rate all terms and conditions the length of the repayment period and whether the loan or debt can be transferred to another party. It is suitable for small personal loans.

Your agreement should clearly state the amount of money youre lending your friend the interest rate and the total amount your friend will pay you back. A free loan agreement template is a document that will benefit anyone who is lending money to a person. It is a document ideal for an agreement between people who do not have contact with one another on a regular basis. But you have to put your financial wellbeing first.

In other words it must be clearly represented as a legal loan agreement letter. The family member that is asking for the money may be required to pay an interest rate defined as a percent compounded annually by the lending party.