When Do You Need A Loan Agreement?
In essence, cash loans come in very handy at time of need, but due to the nature of this facility, they can cause an uneventful situation into an extremely dangerous one. Most of the time this happens because either the borrower cannot pay up the loan or the borrower failed to read between the lines of the terms and conditions of the credit facility. The latter reason is when you should pay particular attention to the document otherwise known as a Loan Agreement.
It is therefore very important that you understand your own situation. And accordingly, before you go ahead and take that leap of faith, Net Lawman Australia advises that you first get acquainted with this introductory guide on the subject.
What Is A Loan Agreement?
It is a legal obligation that entitles a lender to be paid the principle amount plus any interest by the borrower pursuant to the terms of the agreement. In the Australian Courts, the agreement is a legally binding contract and is enforceable by the courts. The agreement will offset all and any argument regarding the loaned amount as a gift. This is important in particular where family or friends are involved in the transaction.
When Should You Have A Loan Agreement?
If in a family, you will need a loan agreement if your partner fails to recognise that the amount you lent him/her was not a gift, but instead was a loan from you to him/her. Furthermore, if in a relationship that is at its end, and you happen to loan an amount to your partner that you consider as significant, and you think your partner will claim it as a gift, then you must have a loan agreement prior to the transaction. Otherwise it can become extremely difficult and costly to remedy.
If between friends, then you definitely need a loan agreement, as friends often joke around with money, and you realize that one day the joke is on you, as your friend has simply refuses to repay you or simply ignores you.
If in a business, you will need a business loan agreement while lending funds to the business to avoid any unforeseen incident where you will end up holding the wrong end of the rope.
A Loan Agreement is a very useful legal instrument that can be drafted to defend against any of the scenarios mentioned above.
A lot of unnecessary and time and resource intensive situations can be mitigated by having a Loan Agreement in place. The agreement lays down the foundations of the rules on how you can control repayments plus interest (if any) that are to be repaid to you. Consider it as a business record which can become an absolute necessity in some other instances, whether for legislative compliance, tax purposes, or accounting practices.
And even though this agreement may not necessarily provide protection against bankruptcy of the borrowers, a Personal Loan Agreement will play an important factor in how the repayment of your loans turn out when financial pressures mount.
Net Lawman Australia provides you comprehensive agreements for an unsecured personal loan. It primarily protects the interests of the lender with standard terms and a large menu of additional provisions from which you may select. With full money back guarantee and guidance notes included, you cannot go wrong with it.
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