A signed IOU form tells the lender that the borrower intends in good faith to repay the loan. And if they don`t, they have a legal document that can be used to claim what is owed to them. Some may worry that formal papers could strain good relationships, such as family members or good friends who borrow money. However, many more relationships have been damaged by someone who does not repay a loan than someone who asks for a written agreement. It is in everyone`s interest to conclude the IOU contract. The only time a lender doesn`t need a deal is when they`re 100% willing to let go of the money or property, whether they`re paid or not. 8. Collection costs: If this note is filed with a legal representative for collection, the borrower agrees to pay a lawyer`s fee of 10% (10%) of the voluntary balance. This fee is added to the outstanding balance of the loan. But if the loan isn`t small, you`ll probably want to include more, like for example: not all states require other witnesses to sign the contract for it to be applicable, but if the loan is large, it`s recommended. It`s easy to find notary services near you, and often your bank or credit union has an employee. It can be free or cheap, depending on the services you use.
A loan agreement is a written promise by a lender to lend money to someone in exchange for the borrower`s promise to repay the borrowed money as described in the agreement. Its main task is to serve as written proof of the amount of a debt and the conditions under which it is repaid, including the interest rate (if any). .