Interest (Usury) – The costs of borrowing money. Money can also create a gap between blood relationships; And even less friends. So if you lend money to a friend or pay, think about the relationship first. Because they can earn money at any time in your life, but once the friendship is ruined, it will take years to start over. Therefore, you have to deal with money issues when your friends keep your friendship aside and act as a businessman. If you don`t want to lose your friendship, establish an official loan agreement with borrowed money, interest rate, fine and payment dates. After that, you have to mention how the money is repaid, there is interest on it or it is interest-free. If the money is borrowed for a number of periods, include the date of each period for which the rate of borrowed money must be paid with interest or interest-free. In addition to the date, you must also include the payment method such as cheque, cash, draft application and traveller`s cheque. It is also worth mentioning the amount of the fine if the borrower does not pay the money back on the due date.
Unsecured loan – For people with higher credit scores, 700 and up. The borrower does not require any guarantee. Guaranteed Loan – For people with lower credit scores, usually less than 700. The term ”secure” means that the borrower must establish guarantees such as a house or a car if the loan is not repaid. It is therefore guaranteed to the lender to receive an asset from the borrower if it is repaid. They may start collecting interest or increase the interest rate if the borrower does not make a payment on time. The increase in interest rates will provide you with additional compensation for the borrower`s non-payment as promised and the difficulty of obtaining the credit contract. The first step to getting a loan is to make a credit check on itself, which can be acquired for $30 from TransUnion, Equifax or Experian. A credit score ranges from 330 to 830, the figure being higher, which represents a lower risk for the lender, in addition to a better interest rate that the borrower can get. In 2016, the average credit value in the United States was 687 (source). For example, the friend who lends the money may require the borrower to rem bourse with a cash check, while prohibiting the use of a personal cheque. Delayed payment – If the borrower feels that he is delaying his payment, he must contact the lender and enter into agreements.
Late surcharges may be charged. In the event of a subsequent disagreement, a simple agreement will serve as evidence to a neutral third party, such as a judge, who can help enforce the treaty. It is the lender`s responsibility to determine the creditworthiness of the borrower. The borrower`s reliability can be assessed using credit reports and references. The borrower could also consider things like the length of time the borrower lived somewhere, or the time spent at a job. Relying only on a verbal promise is often a recipe for a person who gets the short end of the stick. If the repayment terms are complicated, a written agreement allows both parties to clearly define all the terms of payment and the exact amount of interest due.