When it comes to borrowing money from family members, it`s important to establish clear terms and agreements in order to avoid misunderstandings and strained relationships. To ensure that both parties are on the same page, writing a loan contract is essential. Here`s a sample loan contract between family that you can tailor to your specific situation:
Loan Contract Between Family Members
Loan Agreement made on [date] between [Lender`s Name and Address], hereinafter referred to as the Lender, and [Borrower`s Name and Address], hereinafter referred to as the Borrower.
The Lender agrees to loan the Borrower the sum of [Loan Amount] to be used for [purpose of loan].
The loan shall be repaid in [Number of Months] monthly installments of [Payment Amount] each, starting from [Due Date of First Payment]. The final payment shall be due on [Due Date of Final Payment]. The Borrower shall pay any late fees incurred due to missed or past-due payments.
The loan shall accrue interest at a rate of [Interest Rate]% per annum. Interest shall be calculated on a simple interest basis and shall be added to the total amount due.
[If applicable] The Borrower shall provide security for this loan in the form of [Security Details], which shall be returned upon the completion of all loan repayments.
The Borrower may prepay the loan in part or full without penalty.
The Borrower shall be in default if they fail to make any payment within [Number of Days] of the due date. In such cases, the Lender may declare the entire loan amount due and payable immediately.
This agreement shall be governed by the laws of [State/Locale of Lender].
Any dispute arising from this agreement shall be settled by arbitration in accordance with the rules of the [Arbitration Institution].
This agreement contains the entire understanding between the parties and supersedes all prior and contemporaneous agreements and understandings, whether written or oral. This agreement may not be amended except in writing signed by both parties.
In witness whereof, the parties have executed this agreement as of the date first above written.
[Lender`s Signature] [Borrower`s Signature]
[Lender`s Name] [Borrower`s Name]