This facilitates the defence of the agreement in court and makes it less likely that the document will be manipulated at a later date. Each contracting party should receive a full copy of its files. I, Payee Name (“Payee”), borrowed from Loan Date 1,000 $US of Promisor Name (“Promisor”). By signing this agreement, Payee and Promisor confirm that Payee Promisor will repay with the following payment schedule. 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. Loan contracts usually contain information about: it indicates how and when the money is repaid. For example, the party lending the money may require the borrower to repay it with a cash check while prohibiting the use of a personal cheque. When we talk about credit, most people refer to loans to banks, credit unions, mortgages and financial assistance, but people do not think about getting a credit contract for their friends and family, because that is what they are — friends and family.
Why do I need a loan contract for the people I trust the most? A loan contract is not a sign that you don`t trust someone, it`s just a document that you should always have in writing when you lend money, just like with your driver`s license at home when you drive a car. The people who give you a hard time to make a loan in writing are the same people you should care about the most — always have a credit contract when you lend money. Such agreements are common between companies that agree to exchange money for goods or services. These documents can also be used by insurance companies that ask customers to accept certain payment terms. The interest on a loan is paid by the state from which it originates and it is subject to the usury rates laws of the state.