As a result, litigation is less likely to arise from litigation and, if there is a dispute, the agreement may be what the court relies on to decide. I, Sarah Brown, on March 25, 2019, borrowed $2,500 from Tammy Smith. Tammy Smith and I agree that the loan will be repaid with a number of expected financial payments. Both parties agree to the terms of the loan in question. Interest rates are not always part of these agreements. If the borrower has to pay interest, this should be stipulated in the agreement, including how interest is calculated. Depending on the credit score, the lender may ask if guarantees are required for the approval of the loan. The verpromistor, the friend who borrows the money, receives assurances that the beneficiary, the friend who borrows the money, will not claim that the loan was in fact for a much larger amount. A loan agreement is a document between a borrower and a lender that explains a credit repayment plan. Depending on the amount of money borrowed, the lender may decide to have the agreement approved in the presence of a notary.

This is recommended if the total amount, the capital plus interest, is more than the maximum acceptable rate for the small claims court in the jurisdiction of the parties (usually 5,000 usd or 10,000 USD). While loans can be made between family members – a family credit contract – this form can also be used between two organizations or companies that have a business relationship. The interest on a loan is paid by the state from which it originates and it is subject to the usury rates laws of the state. The usury rate varies from each state, so it is important to know the interest rate before the borrower is subject to an interest rate. In this example, our loan comes from the State of New York, which has a maximum usury rate of 16% that we will use. In addition, the written agreement allows the recipient to prove that the service provider has a well-defined payment schedule and has not met the schedule. Use the LawDepot credit agreement model for business transactions, student education, real estate purchases, down payments or personal credits between friends and family.