Borrowing or lending money is a serious business and you need to take extra care of the relationship, especially if the person is someone really close to you. Verbal agreement will not suffice because there is money involved. If the amount has not been paid on the agreed date, it is going to be difficult for the lender to remind the borrower if he or she is a friend or family member. In addition, if you borrowed money and the lender requires you to pay more than what you have agreed on, it will be difficult to get your facts right due to the fact that there is no proof that an agreement ever took place.
If you are going to use your vehicle as collateral, you need to make sure that you secure a written agreement, especially if you are going to borrow from a friend or relative. When there is already bad blood because of money issues, it will be very difficult for you to patch things up. If it is your first time creating a vehicle loan agreement, you can consider the following tips to get started. One rule of thumb is to include all the essential information, such as the borrower’s name, the amount borrowed, lender’s name, the mode of payment agreed on, the interest rate and the payment terms. He or she should also get a copy of the agreement and it should be fully notarized. Below, is a sample of vehicle loan agreement you can use as reference:
Sample Vehicle Loan Agreement
This vehicle loan agreement is made on February 18, 2015, between:
John, a resident of Gold Crest Avenue LA (Lender) AND
Patrick, a resident of Elms Street LA (Borrower)
Due to financial issues, the borrower needs a cash amount of $20,000. This loan has been taken out from the lender with the borrower’s vehicle as collateral. The amount was based on the appraisal rate of the vehicle, which is also deemed proper.
The amount borrowed needs to be repaid within a period of six months. The payment terms have already been discussed and both the lender and borrower have agreed to them. The borrower is expected to make his first payment on March 18, 2015 and is expected to settle dues on August 18, 2015. The interest rate for the money lent is 5% and the monthly payment that is to be made is $3500.
In the event the borrower falls behind payment schedule, he or she agrees to pay an additional $60 on top of the monthly payment. Payment can be made in check, demand draft and cash.
Patrick Smith (Borrower)
Signature & Date
John Stevens (Lender)
Signature & Date