The most important feature of a loan is the amount of money borrowed, so the first thing you want to write about your document is the amount that may be in the first line. Follow by entering the name and address of the borrower and then the lender. In this example, the borrower is in New York State and asks to lend $10,000 to the lender. The borrower agrees that the borrowed money will be repaid later to the lender with interest. In return, the lender cannot change its mind and decide not to lend the money to the borrower, especially if the borrower depends on the lender`s promise and makes a purchase in the hope that it will soon receive money. A loan agreement is a legal contract between a lender and a borrower that defines the terms of a loan. A credit contract model allows lenders and borrowers to agree on the amount of the loan, interest and repayment plan. CONSIDERING that borrowers intend to borrow a fixed amount; and a lender can use a loan contract in court to obtain repayment if the borrower does not comply with the contract. Relying only on a verbal promise is often a recipe for a person who gets the short end of the stick.

If the repayment terms are complicated, a written agreement allows both parties to clearly define all the terms of payment and the exact amount of interest due. If a party does not respect its side of the agreement, the written agreement has the added benefit that both parties understand the consequences. Since the personal loan agreement form is a legal and contractual agreement between two parties, it must contain detailed information on both parties as well as details of the personal loan for which the agreement expires. A loan contract is essential, regardless of the beneficiary. Even if the loan is given to a friend or family member, it is always better to have a loan agreement. It serves as a legal document for resolving disputes that may arise in the future between the borrower and the lender. Has a friend, relative or colleague borrowed money from you? Read our article with smart strategies that will help you get your money back. Family Loan Agreement – To borrow from one family member to another. For private loans, it may be even more important to use a loan contract.