If you are searching for a sample personal loan agreement with collateral, you are in luck. Below, I’ll go over a simple template that you can use to create your own. Before we delve in to the details of the sample contract however, I would like to go over a few tips on lending or borrowing money, especially from friends or family members. Since the transaction is most likely between people who have a close relationship, it can be difficult when a problem arises.
Late payments or failure to pay back the borrower can lead to the deterioration and even the end of a relationship. In order to prevent this from happening, think long and hard before lending money to a friend or loved one. Whenever, I lend people money, I actually just give it to them as a gift and don’t expect any payment in return. Obviously, if the amount is more than I can afford, I simply tell the person that I am unable to lend them the money at this time. More often than not, people completely understand and at least appreciate your consideration.
If you decide to go through with the transaction and you need the money back, it is best to seal the deal with a signed agreement. This will help protect you in case the lender is late on his or her payment or fails to pay at all.
Simple Loan Template with Collateral
On January 15, 2016, I, Carey Grant, residing at 123 Hollywood Lane, Los Angeles, CA 90324, will lend Grace Kelly, residing at 345 Sunset Heights, New York, NY 12345, a total sum of $6,000 in the form of (cash, check, traveler’s check, or money order). This loan is to be fully repaid by July 15, 2016.
Payments will be made over a period of 6 months, starting on February 15, 2016 and ending on July 15, 2016. The interest rate is 8% and as a result, each monthly payment will amount to $1,180.
Every monthly payment must be made before or on the 15th of every month.
If Grace Kelly is unable to pay the interest or the loan, Carey Grant will be guaranteed Grace Kelly’s Hyundai Accent, worth a total of $6,500.
Grace Kelly, (Borrower) Carey Grant, (Lender)
January 15, 2016, (Date) January 15, 2013, (Date)
Additional Safeguards When Lending Money
Besides collateral, there are other things one can do to protect their loan. I would highly recommend that you get the contract signed in the presence of a third party. This will allow another person to vouch for either the borrower or lender in the event that a conflict arises in the future.
Moreover, signing the contract in the presence of a notary public will further protect the two parties involved in the transaction. A notary public is authorized by the state to act as an impartial witness to the signing of important documents. Usually there is a small fee involved, however, it is completely worth it. Adding these additional safeguards will help save both parties a lot of headache down the line.