The process of borrowing or lending money is termed as a loan. Sometimes, an individual needs some asset, property or business but it is not affordable. In such situations, one can apply for the loan.
The loan can be taken through a variety of entities like banks, private loan firms or even sometimes nearby friends or relatives. In all cases, one must repay back with a duly amount of interest charged. Moreover, one must sign an appropriate agreement with defined terms and conditions. The agreement is signed by mutual consent of both parties i.e. the borrower and the lender.
When it comes to a taking loan from friends, it involves must risks and stakes. In the case of borrowing money from friends, the friendship is put at stake. Some uncertain situations arise for not repaying on time. These situations lead to the closure of friendship.
In such case, it is far better to decide mutually that uncertain situations will not affect the friendship. And it should be taken as a business with mutual assent. Some legal proof must exist with both the parties. This keeps everything smooth and concise.
A loan agreement letter between friends consists of many important clauses. In this letter, all the relevant dates must be mentioned like beginning and ending dates. The amount of loan and monthly repayment schedule should be mentioned. The interest rate must be mentioned. Detailed information of the witnesses of the loan should also be mentioned.
I, [NAME] am borrowing a sum of $2,000 from my friend [NAME] on June 2, 2018. My friend & I both agree that the borrowed amount will be recompensed in the form of series on monthly basis.
I am supposed to make a monthly payment on the first of every month in personal check, carrying the amount of $102.10 to Mr. [NAME].
The first sum will be completed on [DATE] and the final expense will be made on [DATE]. I make a pledge that if I remain unsuccessful in paying my episodes of debt in time, I agree to a $5 fine per day. Both the parties show their consent to the standings neighboring the alleged loan.
The debtor & creditor both agree to the payment contract terms as programmed above.
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