FAMILY LOAN AGREEMENT
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What is included
This Family Loan Agreement can be used to record the terms and conditions of a loan made between individual persons or companies. This loan agreement can be used for a variety of different loan types.
Whether the loan is between friends and family or is a commercial loan between two businesses, this Loan Agreement makes it possible to provide a simple interest-free loan or charge interest, set a repayment schedule, and add guarantors.
A Family Loan Agreement is a legal document that outlines the terms and conditions of a loan between family members. It serves to formalise the arrangement and provides a clear record of the loan terms to prevent misunderstandings and disputes. Key elements typically included in a Family Loan Agreement are:
- Loan Amount: The total amount of money being borrowed.
- Interest Rate: The percentage of interest, if any, that will be charged on the loan amount.
- Repayment Schedule: The terms of repayment, including the frequency and amount of payments.
- Loan Term: The duration over which the loan will be repaid.
- Prepayment Terms: Conditions under which the borrower can repay the loan earlier than scheduled without penalties.
- Default Terms: Consequences and actions to be taken if the borrower fails to make payments on time.
- Governing Law: The state laws that will govern the agreement.
- Signatures: Signatures of both the lender and the borrower to make the agreement legally binding.
The purpose of a Family Loan Agreement is to ensure that both parties have a mutual understanding of the loan’s terms and to provide a legal framework for enforcement if necessary. This helps maintain good relationships and financial clarity within the family
This document should be read carefully by the parties who are going to sign it. Every party should then sign the Loan Agreement. Individuals should ensure that their signature of the document is witnessed by another adult person (over the age of 18) who is not named in the loan agreement.
Where a company is a party to this agreement they should ensure that the Loan Agreement is signed by two authorised signatories, either two directors or a director and a company secretary. Where a company only has a single director, that person may sign the agreement as the sole director.
Where the Lender has requested that the borrower provide guarantors, those guarantors should also carefully read the entire Loan Agreement and their guarantee obligations, and sign where indicated.
Applicable law
This agreement is subject to the general principles of contract law. It is suitable for individuals and companies who want a simple and straightforward record of their loan obligations it is not suitable for professional lenders such as finance companies and banks that are subject to more stringent consumer protection laws.
If a Lender is a company, and the Loan is being provided to a shareholder of that company, parties should be aware of division 7A of the Income Tax Assessment Act 1936 (Cth) and use an alternative agreement – the Division 7A Loan Agreement.
If in doubt, seek legal advice.
How to modify the template
The document is in Word formats. You can modify all parts of it and reuse it as many times as you like.
Loan Agreement
Download this Loan Agreement Template for an agreement between a Lender and a Borrower. This template is a formal way of setting out the terms and conditions of the loan.
The lender may be a human or a company. The Borrower can be a human or a company.
It is important that the Borrower fully understands the nature of what they are agreement sets out and the consequences of not repaying can be very serious and may be followed by debt collection
NOW INCLUDES A FREE LOAN CALCULATOR
A loan calculator that enables you to calculate the repayments and a repayment schedule for the loan. Simply enter the loan amount, interest rate, term, commencement date and our loan amortisation will calculate monthly repayment AND give you a schedule of all repayments over the life of the loan including the due dates!
This Loan Agreement Template is 9 Pages
Includes GST
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Suitability
Australia
Preview Sample
Loan Agreement Template
This precedent is a basic loan agreement. Loan transactions can be fairly simple or extremely complex depending on the following:
- parties to the transaction;
- nature of the loan;
- manner of repayment of the loan amount;
- type of interest payable; and
- security to be provided.
The agreement can be customised to take into account the peculiarities of each transaction. It is important to include variables based on the different circumstances of individual borrowers.
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