Uploaded by: Arlene Kuehner at February 13 2018 19:31:59.
The family loan agreement is a template that allows two (2) family members construct a legal contract for the lending of money to a borrower in exchange for being paid back at a later time with interest. Considering the person that is borrowing the money is family, the loan is unsecured which means there are no assets behind the paper agreement. If the borrower does not repay the debt, the lender’s only route to get their money back will be to go through legal action or small claims court.
Sale of the loan proviso: A lender might want to include the option of selling the loan to another party. This allows the lender to free themselves from the agreement through the sale, while still recouping some money. The loan buyer then becomes the creditor. The borrower remains the debtor and must repay the new loan holder.
In a loan agreement template, the amount of the loan is in print. The printed terms prevent future dispute of loan terms. If there is interest on the loan amount, the amount of interest is also part of the documented material. Having the loan amount clear ensures no disagreement about what the borrower receives. The borrower is also clear about repayment expectations. Repayment expectations include the amount of the loan plus interest. It also includes the length of time the borrower must repay the total amount. The time the lender allows for repayment is part of the options the borrower conveys in writing. The timeframe might be days, weeks, months, or years.
When it comes to legal forms and templates, the loan agreement template is valuable. Whether you are the person borrowing money or the lender, a contract is a necessity. The use of a loan agreement is prudent in such instances as it protects the borrower. The pre-defined terms of the loan are clear in the document. The paperwork also gives protection for the lender. That’s because the document serves as evidence of the terms of the loan and what the borrower has agreed to repay.
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