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. Guarantees – An item of value, for example. B a home, is used as insurance to protect the lender if the borrower is not able to repay the loan. Has a friend, relative or colleague borrowed money from you? Read our article with smart strategies that will help you get your money back. Before entering into a commercial loan agreement, the borrower first decides on his affairs concerning his character, his creditworthiness, his cash flow and all the guarantees he must put in collateral for a loan. These presentations are taken into account and the lender then determines the conditions under which they are willing to advance the money. If you have already borrowed money and have not been repaid, understand the need for a credit contract.
A legally binding loan agreement not only represents the terms of the loan, but also protects you if the borrower is late with the loan and does not pay you back as agreed. Borrower – The person or company that receives money from the lender, who then has to repay the money according to the terms of the loan agreement. The first step to getting a loan is to make a credit check on itself, which can be acquired for $30 from TransUnion, Equifax or Experian. A credit score ranges from 330 to 830, the figure being higher, which represents a lower risk for the lender, in addition to a better interest rate that the borrower can get. In 2016, the average credit value in the United States was 687 (source). A secured loan is the case where the borrower promises the lender a property or other asset as collateral for the loan. This means that the lender can take over ownership of this asset if the borrower does not delay the loan. The borrower agrees that the borrowed money will be repaid later to the lender with interest. In return, the lender cannot change its mind and decide not to lend the money to the borrower, especially if the borrower depends on the lender`s promise and makes a purchase in the hope that it will soon receive money.