Considering lending or borrowing money with someone you love?
When borrowing or lending money from family or friends, setting up a personal loan agreement might seem like an unnecessary step.
However, there are many benefits that come with putting in place a more formal IOU.
Taking time to determine a detailed agreement could help to protect you, your relationship and your finances in the short and long term.
So, what should be included in a personal loan agreement?
Here’s a list of seven things you’ll want to include in an IOU with someone you care about.
1.) Legal names of both parties
Nicknames can be fun, but it’s better to keep things by the book when it comes to mixing money and relationships.
2.) Contact information
Consider including phone numbers and email addresses of both parties.
3.) The reason for the loan
Context and clear communication go a long way!
4.) Total loan amount
Clearly state the total amount of the loan or debt in both numeric and written formats so there’s no room for misunderstanding.
5.) Repayment terms
You’ll want to continue the theme of overcommunication on this part by listing out the terms of repayment, including the schedule of payments, each payment due date and the final payment due date.
6.) Dates
Include the date when the loan was issued and the expected dates of repayment.
7.) Signatures
Both parties should sign and date the IOU or loan agreement to signify their acceptance of the terms.
It’s important to take the transaction seriously by formalizing it with a written (or typed) agreement.
Taking the time to clarify the terms of the loan, protecting the relationship and establishing a sense of responsibility can help you proactively avoid miscommunication and misunderstandings down the road.
If you’re currently jotting down your IOU on a piece of paper or into a Word doc, we’re here for you!
With Zirtue, you can ditch the paper napkin and completely digitize your personal loan experience with all the items listed above already baked into the process.
