A Personal Loan Agreement is a document that outlines the terms and conditions of a loan between two parties.
It is a legal contract that specifies the amount borrowed, the interest rate, the repayment schedule, and any other relevant details of the loan.
It is typically created between an individual and one of the following:
- Lenders (for example, a bank)
- Family
- Friends
With this agreement, you can follow certain guidelines or rules to lend money to friends or family that are more difficult to follow with other types of loans.
Types of Personal Loans
There are 5 different types of Personal Loans that you can use to borrow or lend money. These loans include:
- Secured: Includes collateral
- Fixed-rate: Keeps the interest rate the same throughout the repayment
- Co-sign: Makes someone else liable if the borrower has poor credit
- Variable rate: Ties interest rate to a third party
- Unsecured: Does not require collateral
Unsecured loans are ideal when making a Personal Loan Agreement between friends and family.