Private credit - A loan between family and friends. Not all loans are structured in the same way, some lenders prefer weekly, monthly or any other type of preferential schedule. Most loans usually use the monthly payment plan, so the borrower must, for example, pay the lender on the 1st of each month, while the full amount is paid until January 1, 2019, which gives the borrower 2 years to repay the loan. A credit agreement is a legal agreement between a lender and a borrower that defines the terms of a loan. A model credit agreement allows lenders and borrowers to agree on the amount of credit, interest and repayment plan. The state in which your loan is made, i.e. the state in which the lender`s business is or resides, is the state that manages your loan. In this example, our loan comes from New York State. For more information, read our article on the differences between the three most common forms of credit and choose who is right for you.

Secured loan – For people with lower credit scores, usually less than 700. The term "secure" means that the borrower must deposit collateral such as a house or car if the loan is not repaid. Therefore, the lender is guaranteed to receive an asset from the borrower if it is repaid. In the event that the borrower is late in the loan, the borrower is responsible for all costs, including any attorney`s fees. Under no circumstances is the borrower always responsible for the payment of the principal and interest in case of delay. It is enough to enter the State in which the loan was contracted. Using a credit agreement protects you as a lender, as it legally imposes the borrower`s commitment to repay the loan in regular payments or lump sum. A borrower may also find a credit agreement useful because it determines the loan details for its records and helps track payments. Late - If the borrower is in arrears due to non-payment, the interest rate is due to the balance of the loan until the loan is paid in full, in accordance with the agreement established by the lender.

A loan is not legally binding without signatures from both the borrower and the lender. For additional protection for both parties, it is strongly recommended to have two witnesses signed and to be present at the time of signing. Depending on the loan that has been selected, a legal contract must be drawn up with the terms of the loan agreement, including: 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 enforcement of the contract. . . .