Simple Personal Loan Agreement

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This private credit agreement should be used in the simplest situations, for example when one family member lends money to another or when money is borrowed between friends or colleagues. A person or organization that practices predatory loans by calculating high interest rates (known as the « credit shark »). Each state has its own interest rate limits (called the « usury rate ») and usurers illegally calculate higher than the maximum allowable rate, although not all credit sharks practice illegally, but instead fraudulently calculate the highest interest rate, which is legal under the law. It is therefore strongly recommended to formally file oral agreements in writing in a loan agreement. That agreement should, inter alia, determine the amount of the loan, repayment agreements and, where applicable, interest and guarantees. Using a credit agreement protects you as a lender, as it legally imposes the borrower`s commitment to repay the loan in regular payments or lump sum. A borrower may also find a credit agreement useful because it determines the loan details for its records and helps track payments. As far as legal forms and models are concerned, the draft credit agreement is valuable. Whether you are the person lending money or the lender, a contract is a necessity…