How to Write a Legal Document for Lending Money

A loan agreement should be included with every loan of money. For loans from a commercial lender, the lender will provide the agreement. But for loans between friends or relatives, you need to create your own loan agreement. If you need help with a legal contract on lending money, you can publish your legal needs on the UpCounsel market. UpCounsel only accepts the top 5% of lawyers on its website. UpCounsel`s lawyers come from law schools such as Harvard Law and Yale Law and have an average of 14 years of legal experience, including working with or on behalf of companies such as Google, Menlo Ventures and Airbnb. Debt relief – After the full payment of a note, this document must be issued as proof that the borrower has repaid his debts. The most important feature of any loan is the amount of money borrowed, so the first thing you want to write on your document is the amount that can be on the first line. Then enter the name and address of the borrower and then the lender. In this example, the borrower is in New York State and asks to borrow $10,000 from the lender.

All the legal documents you need – customize, share, print and more The date of the agreement must be indicated either at the beginning of the document or directly above the signature of each party. Using a loan agreement protects you as a lender because it legally enforces the borrower`s promise to repay the loan in the form of regular payments or lump sums. A borrower may also find a loan agreement useful as it sets out the loan details for their records and helps track payments. A simple loan agreement describes how much has been borrowed, as well as whether interest is due and what should happen if the money is not repaid. The following example shows how to write and complete our free loan agreement template. Follow the steps and enter your information accordingly. For personal loans, it may be even more important to use a loan agreement. To the IRS, money exchanged between family members may look like gifts or loans for tax purposes. Depending on the loan chosen, a legal contract must be drawn up stating the terms of the loan agreement, including: I owe you (IOU) – The acceptance and confirmation of money borrowed from one (1) party to another. There are usually no details on how or when the money is repaid, or lists interest rates, payment penalties, etc.

A loan agreement is a document between a borrower and a lender that describes a loan repayment plan. Ask a lawyer questions or ask them to verify your Borrower document – The person or company that receives money from the lender, who then has to repay the money under the terms of the loan agreement. Promissory note – A promise of payment made by a debtor and a creditor who borrows money. 3. Document date This sounds like common sense, but it`s easy to ignore. The repayment of the loan depends on the date on which the contract is concluded. Choose a start and end date for the refund of the money and write it down. Something like “The refund will begin on the first Friday of December 2010 and will end on the last Friday of December 2010.” Interest (usury) – The costs associated with borrowing money. Depending on the amount borrowed, the lender may decide to have the contract approved in the presence of a notary. This is recommended if the total amount, principal plus interest, is greater than the maximum rate acceptable to small claims court in the parties` jurisdiction (usually $5,000 or $10,000).

While charging interest often goes against the idea of a family loan, it`s important to keep in mind that the family member lending the money is forgoing the interest they could potentially earn on the money if they hadn`t borrowed it. If the lender charged interest, it would compensate for the loss. Because the stock market can be a risky venture, it may be safer to lend money to a family member with interest. A person or organization that practices predatory loans by charging high interest rates (known as a “loan shark”). Each state has its own limits on interest rates (called “usurious interest”) and usurers illegally charge more than the maximum allowable rate, although not all usurers practice illegally, but fraudulently charge the highest interest rate, which is legal under the law. A loan agreement is a legal agreement between a lender and a borrower that defines the terms of a loan. Using a loan agreement template, lenders and borrowers can agree on the loan amount, interest, and repayment schedule. can be used to document a loan between individuals or businesses. A contract is the written promise of the borrower to repay a sum of money to a lender. The contract is used to describe the conditions, including how the money will be refunded and when. .