When borrowing money from a family member, it`s important to have a written agreement in place to ensure both parties are clear on the terms and conditions of the loan. Here`s an example loan agreement between family members that can be used as a template for your own agreement:
Loan Agreement between Family Members
This agreement is made on [date] between [lender`s name and address] (“Lender”) and [borrower`s name and address] (“Borrower”).
Loan Amount: The Lender agrees to loan the Borrower [dollar amount] (“Loan Amount”).
Interest Rate: The Loan Amount shall accrue interest at a rate of [interest rate]% per annum, calculated on the outstanding balance that is not repaid in full by the due date.
Repayment Terms: The Borrower shall repay the Loan Amount to the Lender in [number of months] monthly instalments of [dollar amount] each, starting on [start date of repayment]. The final payment shall include all outstanding interest.
Prepayment: The Borrower may prepay this loan in full or in part at any time without penalty.
Late Payment: If the Borrower fails to make a payment within [number of days] days of the due date, the Lender may charge a late fee of [dollar amount] per day until the payment is made in full.
Collateral: [Optional] The Borrower shall provide collateral in the form of [description of collateral] to secure the Loan Amount. In the event of default, the Lender may sell the collateral to recover the Loan Amount.
Default: The Borrower shall be in default if they fail to make any payment within [number of days] days of the due date or if they breach any other term of this agreement. In such an event, the Lender may declare the entire outstanding balance of the Loan Amount, including all interest, immediately due and payable.
Governing Law: This Agreement shall be governed by and construed in accordance with the laws of [state or province] and any applicable federal laws.
Entire Agreement: This agreement constitutes the entire agreement between the parties and supersedes all prior agreements and understandings, both written and oral, relating to the subject matter of this agreement.
Execution: This agreement may be executed in counterparts and shall become binding on the date signed by both parties.
Lender: _______________________ Date: ____________
Borrower: _____________________ Date: ____________
By having a clear loan agreement in place, you can avoid any misunderstandings or disagreements between family members. Be sure to consult with an attorney to ensure your agreement complies with all applicable laws and regulations in your state.