Borrowing money is an important obligation, regardless of the amount, which is why it is important to protect both parties with a loan agreement. A loan agreement not only describes the terms of the loan, but also serves as proof that the money, goods, or services were not a gift to the borrower. This is important because it prevents someone from trying to get out of the refund by claiming this, but it can also help you make sure it`s not a problem with the IRS later. Even if you think you may not need a loan agreement with a friend or family member, it`s still a good idea to have it just to make sure there are no problems or disagreements about the terms that could ruin a valuable relationship later on. I Owe You (IOU) – The acceptance and confirmation of money lent 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. Acceleration – A clause in a loan agreement that protects the lender by requiring the borrower to repay the loan (both principal and accrued interest) immediately if certain conditions occur. In addition, you should include a section that describes all warranty information, if you have one. A guarantor is also called a co-signer. This person or company undertakes to repay the loan in the event of default by the borrower.
You can add more than one guarantor to the loan agreement, but they must accept all the terms set out in the loan, just like the borrower. Just as you took the borrower`s information, you need to include each guarantor`s information, and they have to sign the agreement. They must provide their full legal name as well as their full address. If you do not involve a guarantor, you do not need to include this section in the loan agreement. Finally, you must include a section that contains the date and place of signing the agreement. In this section of the loan agreement, you must provide various information, such as.B. the effective date of the contract, the state where the legal proceedings are to take place, and the specific county of that state. This is important because it deals with when the loan agreement is active and saves you from having to travel to another location in the event of a dispute or non-payment of the contract.
Borrower – The person or business that receives money from the lender, who must then repay the money under the terms of the loan agreement. Depending on the amount borrowed, the lender may decide to have the contract authorized in the presence of a notary. .