Friendly Loan - Very low interest or no interest loan
Loans with very low interest or without interest and for a short period of time may be called friendly loans. Almost always, lenders of such loans are not financial institutions like banks or other interest charging organisations or entity.
Friendly loan lenders are usually people who are known to the borrowers and are willing to help the borrowers out of the financial fix which the borrowers are in. Usually this type of loan is made between friends, relatives or colleagues.
Notwithstanding the nature of such loans, it is advisable and prudent for the lender to evidence the lending with a loan agreement to facilitate loan recovery using all available legal channels in the event the borrower defaults on the promised repayment.
Sample Loan Agreement - Without Interest
A sample of a loan without interest or friendly loan agreement is provided here for educational and informational purposes only. It shall not in any way howsoever be treated as constituting legal advice, or anything like that (howsoever remote), to be relied upon as a basis for securing the lending of your hard-earned money to someone else.
-- START of sample loan agreement -----
THIS LOAN AGREEMENT is made on ___ day of _______ 2006
BETWEEN
(1) [name of lender and ID number etc.] of [lender's address] (hereinafter referred to as the "Lender") of the one part;
AND
(2) [name of borrower and ID number etc.] of [borrower's address] (hereinafter referred to as the "Borrower") of the other part.
WHEREAS
(A) At the request of the Borrower, the Lender has agreed to grant a loan to the Borrower for the sum of [amount of loan and currency in words] ([amount of loan in numbers and currency symbol]) only (hereinafter referred to as "the Loan”) subject to the terms and conditions hereinafter appearing.
(B) The purpose of the Loan is for the Borrower's [state purpose of loan].
IT IS HEREBY AGREED BY THE PARTIES AS FOLLOWS:
1. The Lender shall, upon the terms and subject to the conditions contained in this Loan Agreement, make available the Loan to or for the benefit of the Borrower provided the Lender shall not be under any obligation to ensure that the Loan is utilised by the Borrower for the purpose it was requested for.
2. The Lender's obligations to make available the Loan shall be subject to the following conditions precedent:
(a) This Loan Agreement is duly executed and stamped.
(b) The Lender shall have received a post dated cheque from the Borrower for the sum of [amount of loan and currency in words] ([amount of loan in numbers and currency symbol]) only.
3. The Borrower shall repay the Loan by [date of repayment]. The Loan shall be repaid in full and shall not carry any interest. However the Borrower may repay the Loan or any part thereof early but may not reborrow any amount repaid.
4. The Borrower shall make payment to the Lender in respect of the Loan without any deduction or set-off.
5. Notwithstanding anything herein contained, the Loan will become due and payable or repayable forthwith on demand by the Lender if:
(a) the Borrower is in breach of any of the provisions of this Loan Agreement; or
(b) the Borrower is in default of any other financial obligation to any person or party; or
(c) the Borrower makes or seeks an arrangement with its creditors, or
(d) any distress or execution is levied on or affects any of the Borrower's property or assets; or
(e) any legal action or proceeding is commenced against the Borrower.
6. Any demand or notice in respect of this Loan Agreement and/or the Loan shall be in writing and may be served on the Borrower personally or by post to the address as stated above. Any such demand or notice delivered personally shall be deemed to have been received immediately upon delivery. Any such demand or notice sent by post shall be deemed to have been received at the opening of business on the first working day following the day on which it was posted, even if returned undelivered.
7. Time shall be of the essence in respect of the Borrower's obligation under or in respect of the Loan but no failure by the Lender to exercise or delay by the Lender in exercising any right or remedy under or in respect of this Loan Agreement shall operate as a waiver of it, nor shall any single partial or defective exercise by the Lender of any such right or remedy preclude any other or further exercise of that or any other right or remedy.
8. All amendments to this Loan Agreement must be in writing and signed by the Borrower and the Lender. This Loan Agreement represents the entire agreement about this subject matter, and supersedes prior negotiations or agreements. All prior agreements, understandings, representations, warranties, and negotiations between the Borrower and the Lender about the subject matter of this Loan Agreement merge into this Loan Agreement.
9. This Loan Agreement shall be binding upon the heirs, personal representatives and successors in title of the Borrower and the Lender.
10. The Borrower and the Lender hereby agree that this Loan Agreement shall be governed by the laws of [state or country] without regard to the principles of conflicts of law. The Borrower and the Lender each submit to the exclusive jurisdiction of the courts of [state or country].
AS WITNESS WHEREOF the Borrower and the Lender have hereunto caused this Loan Agreement to be executed as of the date first above written.
| SIGNED by the BORROWER in the presence of |
) |
|
_______________ |
| SIGNED by the LENDER in the presence of |
) |
|
_______________ |
-- END of sample loan agreement -----
Related
Loan letter to individual borrower