If a disagreement subsequently arises, a simple agreement serves as evidence for a neutral third party such as a judge who can assist in the application of the treaty. Interest rates are not always part of these agreements. If the borrower has to pay interest, this should be defined in the agreement, including how the interest is calculated. A person or organization that practices predatory loans by calculating high interest rates (known as the “credit shark”). Each state has its own interest rate limits (called the “usury rate”) and usurers illegally calculate higher than the maximum allowable rate, although not all credit sharks practice illegally, but instead fraudulently calculate the highest interest rate, which is legal under the law. A one-sided document is all that is needed to establish a binding payment agreement letter. The following example is a template that can be easily adapted to a large number of transactions. A credit agreement is more comprehensive than a debt instrument and contains clauses about the entire agreement, additional expenses and the modification process (i.e.: How to change the terms of the agreement). Use a credit agreement for high-rise loans or loans from multiple lenders. Use a debt account for loans that come from non-traditional lenders such as individuals or businesses instead of banks or credit unions.
This credit agreement will be granted on February 12, 2014 between: – the money will be loaned for a period of six months. Both the borrower and the lender have agreed on the terms of payment. Thereafter, payment must be made at 12 of each month for a period of six months. The first payment date is the 12. March 2014 and the last payment date is August 12, 2014. The money is lent at an interest rate of 6%. Therefore, the monthly payment amount is 1767 $US. Lend money to family and friends – when it comes to loans, most refer to loans to banks, credit unions, mortgages and financial aid, but hardly do people consider getting a credit agreement for their friends and family, because that`s exactly what they are – friends and family. Why do I need a credit agreement for the people I trust the most? A credit agreement isn`t a sign that you`re not trusting someone, it`s just a document you should always have in writing when you lend money, just like having your driver`s license with you when you drive a car. .