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Agreement To Lend Money To A Friend

10Sep

Before you lend money to a friend or family member, think (or ask them): Sometimes in these situations, the “borrower” is really looking for a gift and doesn`t really intend to pay the money back. It may not even be a deliberate decision on his part, but it is important to be aware of it. You may even decide that you want to make a gift (perhaps in a smaller amount) in order to avoid the bad feelings and possible complications associated with a loan – but both parties should be aware of the decision to make a gift and why. A lender can use a legal credit agreement to enforce the repayment if the borrower does not maintain the end of the agreement. If your friend is struggling to honor refunds as agreed, encourage them to talk to you about the problem. Try to agree with them on the best way to pay off their debts. A credit agreement is a legal agreement between a lender and a borrower that defines the terms of a loan. A model credit agreement allows lenders and borrowers to agree on the amount of credit, interest and repayment plan. Once the money has been transferred, the agreement comes into effect, and now it is important to keep records – about the initial transfer and when and how much you were refunded. Reimbursement by standing order is preferable.

The credit agreement should clearly describe how the money is repaid and what happens if the borrower is unable to repay. You will find a standard agreement especially for lending to friends or family in our library. It compensates for the need to be formal enough for the borrower to know that the loan is not charity, with simple language, so that the agreement does not seem “excessive” in the situation where the lender and borrower know each other well. If they don`t have a lot of money and are already struggling to pay their bills, another credit may not be the best. If others have lent them money and are struggling to get it back, be more careful. Interest is a way for the lender to calculate money for the loan and offset the risk associated with the transaction. It may seem quite difficult to insist on a written agreement in relationships with friends or family, but it is the best way to separate your personal relationship from a financial relationship and recognize that personal ties should not be influenced or influenced by financial responsibilities. . . .