Taking loans from friends or relatives requires a mutual trust between the two. Unless the persons are known to each other very closely it is a risk to lend money without making a written agreement to return the money within a specific time and with a particular rate of interest as decided by the parties. Making a loan agreement is very important if huge amounts are given as loan to any party. The loan agreement should mention the date of loan, amount of loan, name and address of lender, name and address of borrower, when to be repaid, rate of interest, mode of repayment, penalty etc. Hence don’t hesitate to help your friends or relatives, but make sure you have a loan agreement signed and ready with you and relax.
Debt Settlement Agreement
Settling the debt is always to be in writing. When a person takes a loan from an individual or a financial institution, there is always a written document with reference to the amount of loan, interest, term of loan, repayment options, date of completing the loan repayment etc. In the same way when the loan is repaid completely with interest and the term is over, a similar written document is to be made mentioning the closure of the loan and the date of closing or settling the loan.
When one person takes money from another or any financial institution, it can be recorded in writing by making a Promissory note. A promissory note is a legal acceptance or promise on a Stamp paper made by the Borrower that he promises to pay the Lender a certain sum of money on a particular date. It needs to be drafted on a Stamp paper and signed by the both the parties, the Lender and the Borrower in the presence of two witnesses. So make a promissory note if you wish to get back your money lent to someone or if you are borrowing money from someone.
We have received your request and we will get back to you shortly