PERSONAL LOAN AGREEMENTS
A personal loan agreement is a written contract between two parties (the lender and the borrower) that describes the amount of money being borrowed, the terms of payment, and how long the borrower has until he/she must repay the loan in full. This type of written contract is essential to pursuing the matter in court in the event that either party does not abide by its terms. At Tsang & Associates, we have the experience you need to draft a comprehensive and binding personal loan agreement. Our attorneys will assess your circumstances and assist you in preparing all of the necessary paperwork to create a personal loan agreement tailored to your needs.
Our fee structure is unique to us as we strive to tailor our services for each client individually. We adapt price standards that are capable of fluctuating for each client. Clients may retain us for one or all of the above steps/services of a personal loan agreement.
We are happy to customize a proposal for you during a consultation. Please see the below information.
WHAT MAKES US DIFFERENT
At Tsang & Associates, we treat each client like a well-formed partnership and involve you in every step of the process. When drafting a personal loan agreement, we work together with you until you are satisfied with our services. By the end of our partnership, our goal is not only to help you find success but also to help you become an expert in your own case.
CASE PROCESSING OVERVIEW
Step 1: Strategy Session for Personal Loan Agreement
This is the most crucial step for your Personal Loan Agreement. We will review all of the supporting documents to create a strategy, a customized checklist, and a timeline to serve as the guiding foundation for your Personal Loan Agreement.
Step 2: Drafting Personal Loan Agreement
Step 3: Review Personal Loan Agreement
After a professional personal loan agreement draft is completed, our experienced attorneys will review to ensure clarity between parties.
- Advice on what terms of payment are best
- Advice on the implications of certain interest terms
- Verifying the amount in question to loan out
- Amount of money being borrowed
- Schedule of installments/payments
- Terms of interest, if any
- Collateral being put up, if any
- Date the loan must be repaid in full
- Witness Names and addresses
- Name and address of any cosigners
- Penalties for late payments
- Options/procedures for selling the loan, should the lender so desire
Once signed, a personal loan agreement is a legally binding contract. Standard contract law dictates that if one signs the contract and does not uphold its terms, they may be sued for breach of contract. In the event of such a lawsuit, one may be forced to pay damages and legal fees, so careful consideration and consultation of a third party is strongly advised before signing a personal loan agreement.
Loans vs Gifts:
When making a personal loan agreement with a family member or friend, there are several factors to consider. First of all, it is important to abide by the aforementioned procedure of drawing up a contract with interest and payment schedules which the lender and borrower have both signed off on. This makes the loan agreement a legally binding contract. If the loan agreement is in any way not a legal contract, the IRS will see it as a gift, which comes with its own consequences when it comes to tax laws.
Also, if the lender chooses not to charge the borrower interest on the loan, the IRS may see the interest income the lender could have earned as a gift to the borrower and choose to tax the lender on it. It is important to charge at least some interest in order to make it clear that the loan agreement is not a gift. The IRS will charge lenders on an interest-free loan if the interest he/she could have earned on the loan exceeds $14,000 when added to any other money given as a gift.
- Potential for higher borrowing limits than a credit card
- Potential for a lower interest rate than a credit card
- Collateral usually is not required
- Easier to manage than multiple credit card accounts
- Predictable repayment schedule
- Longer repayment term than some alternatives
Frequently Asked Questions
What is the purpose of a loan agreement contract?
- The main purpose is to professionally set out what the involved parties are agreeing to, what their responsibilities are, and how long the duration would be. The contract also defines the purpose of the money as well as the amount of money lent.
What are some consequences of not having a loan agreement contract?
- For lenders:
- Not being repaid the money that was lent
- IRS levying a gift tax up to 40%
- Risks to personal safety if there is a dispute with a hostile party
- For borrowers:
- Unpaid bills
- Paying for a car or house without proof of payment
- Paying IRS income tax for a gift
- Paying lawyer fees to fight debt collectors
SCHEDULE A SESSION
Call or email us to set up your 1-hour consultation. Easily pay the $250 consultation fee over the phone or through our email link. If you would like to have a quick chat with our team before setting up the consultation, feel free to use the calendar on the right to book your 10 minute call.
In addition to personal loan agreements, we also specialize in other areas of family counsel. At Tsang & Associates, we treat you like family to ensure your family gets the full legal support needed. Check out our comprehensive services down below.
IT'S LIKE HAVING A LAWYER IN THE FAMILY
- As a family-owned law firm, we pride ourselves on taking care of our clients as if they are family. As your family counsel, we offer you the same support we provide our family, whether it is legal representation or problem-solving.
- A lawyer in the family provides you the comfort to pursue any endeavors and face any challenges when they arise.
HOW IT WORKS
Just like your bank account, you maintain $5,000 fully-refundable deposit in your own private Escrow Account. The money you deposit will go towards your billing services and you are able to take out the money anytime. If a problem arises, we assist and guide you if you have the $1,500 amount in your Escrow account. Also, when you have a family counsel with us, we provide exclusive service and fee deductions on additional legal services you might be interested in.
Situations happen. To protect your family from the negative and long term effects of adversaries, a family counsel can be tremendously beneficial and valuable. From real estate planning to responding to indentity theft, we are here to mitigate and prevent any lasting damages to the welfare of your family.
Planning ahead helps you build a life of stability and success.
If a problem arises, you have a trusted attorney you can rely on.
Leave a legacy for your children and pave the pathway for their success