The family loan agreement is a document that is made between relation by blood or marriage with one (1) acting as borrower and the other a lender. The family member that is asking for the money may be required to pay an interest rate, defined as a percent compounded annually, by the lending party. If so, the lender will be paid back more money than what was originally lent to the borrower. Although, usually funds loaned between family members is not charged an interest rate but depends on the family relationship.
How to Write
Step 1 – Enter the amount of the loan by writing in-full and entering numerically followed by the date of origination.
Step 2 – Enter the borrower’s full information including their full name and address. In the fillable fields after enter the same details for the lender. In Section a below write the relationship of the parties (by blood or marriage).
Step 3 – In Section II, enter how the funds will be paid back to the lender. Choose from once per month, week, or any other option agreed upon by the parties (enter the details).
Below there should be a date entered, whether payments are made on-time or not, that the loan is due and payable.
Step 4 – In Section III, the parties should agree on the interest rate for the loan which cannot be more than the State’s maximum allowed usury rate. The family members may also decide to not have the borrowed money bear interest.
Step 5 – In Section X, the parties should enter the State where the borrower is located as those will be the laws the loan will be under. The State should also be written in Section XI.
Step 6 – In the signature area both the lender and borrower should sign the document with at least two (2) witnesses. Once the money has been transferred and the agreement signed the note shall become legal.