How to Write a Loan Agreement Between Friends?

Do you know about borrowing money from a friend contract

?

If you are also stuck in such a situation let me help you out

.

Writing an agreement to lend money to a friend involves prudent steps to avoid misunderstandings or disputes in the future.

Here's a simple guide for lending friendly loan agreement format:

•      

  You should start by writing "Loan Agreement" at the top of the document.

•      

  Write the full legal names and addresses of the parties involved (the lender and borrower) in the agreement.

•      

  Clearly state the details of the loan:

1. The loan amount (in both numbers and words).

2. The date when the loan is being taken.

3. Whether the loan is interest-free or carries interest. If it carries interest, specify the interest rate.

•      

  Also, mention

  the terms and conditions of the loan repayment:

1. The repayment schedule

2. The date of the first payment and the due date for subsequent payments.

3. The method of repayment such as bank transfer, cash, or check.

4. Any late payment penalties.

•      

  If there is a collateral, describe the collateral and its value.

•      

  Specify the legal jurisdiction that will govern your agreement.

•      

  Agreement should Include signs of both the parties and the date of the agreement.

•      

  You can also

  have witnesses sign if required.

•      

  You can also opt notarization for your agreements but it's not mandatory.

•      

  You should also include clauses detailing what happens in case of default (non-payment).

Please note that for borrowing money from a friend contract

, it's highly recommended to consult with an attorney who can provide you guidance.

Read more

It's advisable to set your friendship aside if you need to borrow money from a friend and treat the situation more like a business transaction. You should also create a formal loan agreement that includes all the relevant information. In other words, it should be clear that the letter is a valid loan agreement. So let’s see how to make a friendly loan agreement format India.

How to draft loan agreement between friends?

I have listed down an example of an informal loan agreement between friends. You can refer to the following example to know how to write a loan agreement between friends:

CONTRACT FOR A LOAN BETWEEN

……………..

AND

……………..

THIS AGREEMENT, made and executed at _____ on the __ day of _____, BETWEEN _________________, hereinafter referred to as "the Lender," AND _________________ hereinafter referred to as "the Borrower," shall be binding upon and lawful against the parties hereto and their respective heirs, executors, administrators, and assigns.

WHEREFORE, the Borrower has asked the Lender for an interest-free loan in the amount of Rs. ________/- (Rupees ___________________ only) for a duration of __ years since he/she is in need of money;

AND WHILE BEING AWARE THAT DUE TO THE LENDER AND BORROWER'S LONG-TERM KNOWLEDGE, THE LENDER HAS AGREED TO ISSUE A LOAN TO THE BORROWER WITHOUT PAYING INTEREST;

AND WHILE READY TO RECORD THE CONDITIONS AND TERMS OF THIS LOAN IN WRITING, THE PARTIES HERETO;

NOW THIS AGREEMENT WITNESSETH, and the parties hereto thus agree as follows:-

1. The Borrower has asked for a loan from the Lender in the amount of Rs. ___________/- (Rupees ________________________ only) because he/she needs the money to buy a residential apartment. The Lender has accepted.

2. The borrower needs the stated loan for a term of ___ years, starting on ___/__ and ending on / .

3. The borrower hereby pledges his/her personal guarantee to repay the loan in full within the stated time frame of __ years, at a cost of Rs. ___________/- (Rupees ____________________only).

4. The parties to this Agreement have mutually agreed upon the terms and conditions of this Agreement.

The parties hereto have put their respective hands hereto and hereunto subscribed the day and year first herein written IN WITNESS WHEREOF.

DELIVERED AND SIGNED by the Within-

In the presence of the named Lender

DELIVERED AND SIGNED by the Within-

In the presence of the named Borrower

This is the friendly loan agreement format India you must be aware of.