If you are lending money to another, it is a wise idea to put your agreement in writing and take some form of security. The kind of document you need is a Secured Loan Agreement. It’s especially useful if you are lending to a friend or family member.
Taking security over an asset of value, gives you a way to recoup your funds in the event that the borrower fails to repay the loan.
Security may be taken over anything of value, for example, cars, shares, boats, jewellery, business stock or plant and equipment.
If you don’t need to take security then you might want to use Simple Loan Agreement instead.
Where one party is lending money to another, and taking security, it is recommended that the agreement between the parties be put in writing. You also should ensure that the terms are clearly set out and easy to understand.
Secured loan agreements need to have some specific information in them.
You will need to set out the amount loaned, the interest, amount and frequency of payments, how defaults are to be handled and what will happen if the secured asset is damaged.
Any time one person or party is lending money to another and taking security for the loan, it is vital that a clearly written legal agreement is made and signed. This easy to understand and use agreement takes the hassle out of any such arrangement.
The agreement should make all of these issues clear so that both parties fully understand each of their rights and responsibilities. This will minimise the possibility of a dispute or misunderstanding between the parties.
RP Emery and Associates DIY Legal Kits supplies easy-to-use and professionally drafted Secured Loan Agreements, Available for Immediate Download
Find Out More
