A standard loan contract shows how the loan proceeds can be spent. For example, standard loan contracts are mortgage contracts that indicate that money can only be spent on the purchase of a home and student loan contracts that stipulate that funds can only be spent for tuition payments. Standard loan contracts are generally relatively rigid compared to private credit contracts. A: A personal loan contract may stipulate that periodic repayments are paid only to interest or interest and a portion of the principal. A amortization schedule shows how repayments are split between principal and interest. Depending on the credit score, the lender may ask if guarantees are required for the approval of the loan. If you are unable or unwilling to obtain guarantees for a standard loan, a private loan may be a viable option, as personal loans can be granted without collateral. In case the borrower is late in the loan, the borrower is responsible for all fees, including all legal fees. Regardless of this, the borrower is still responsible for paying principal and interest in the event of default.
All you have to do is seize the state in which the loan was taken out. In the event of a subsequent disagreement, a simple agreement will serve as evidence to a neutral third party, such as a judge, who can help enforce the treaty. Guarantees – An item of value, for example. B a home, is used as insurance to protect the lender if the borrower is not able to repay the loan. It is therefore highly recommended that oral agreements be fixed in writing in a loan agreement. This agreement should specify, among other things, the amount of the loan, the repayment terms and, if necessary, interest and guarantees. Each party receives a copy of the original signatures. If the money is paid in cash, the lender must apply for a signed receipt. If you need an agreement with more protection for the lender, please read other documents in this file, including the abbreviated version of the loan agreement. Another step would be some security against the loan – see the loan contracts guaranteed on it. Depending on the amount of money borrowed, the lender may decide to have the agreement approved in the presence of a notary.
This is recommended if the total amount, the capital plus interest, is more than the maximum acceptable rate for the small claims court in the jurisdiction of the parties (usually 5,000 usd or 10,000 USD).