PERSONAL LOAN BETWEEN FRIENDS CONTRACT
This Personal Loan Contract ("Contract"), dated [DATE], is entered into between [Your Name], hereinafter referred to as the "Lender," residing at [Your Address], and [BORROWER'S NAME], hereinafter referred to as the "Borrower," residing at [BORROWER'S ADDRESS].
1. Loan Amount and Terms
1.1 Loan Amount
The Lender, [Your Name], agrees to lend the Borrower, [BORROWER'S NAME], the sum of $5,000 (the "Loan") under the terms and conditions outlined in this Contract.
1.2 Repayment Terms
The Borrower shall repay the entire loan amount, including any accrued interest, by [LOAN REPAYMENT DATE]. The repayment schedule and method shall be as agreed upon by both parties. The Borrower acknowledges that failure to adhere to the repayment schedule may result in additional fees or penalties as outlined in this Contract.
2. Interest
2.1 Accrual of Interest
The Loan shall accrue interest at a rate of 8% per annum, calculated on the outstanding balance. The method of interest calculation and compounding frequency shall be as agreed upon between the Lender and the Borrower. The Borrower understands that the total amount to be repaid will include both the principal Loan amount and the accrued interest.
2.2 Interest Calculation Example
As an illustrative example, if the Loan amount is $10,000 and the annual interest rate is 5%, the annual interest accrued would be $500. The Borrower acknowledges the importance of understanding the interest calculation to ensure timely and accurate repayment.
3. Default
3.1 Payment Default
If the Borrower fails to make any payment by the due date specified in this Contract, the Lender reserves the right to demand immediate repayment of the remaining Loan balance, along with any accrued interest and applicable fees. The Borrower understands the consequences of defaulting on the Loan and agrees to communicate promptly with the Lender in case of any financial difficulties.
3.2 Remedies for Default
Upon default, the Lender may pursue legal remedies to recover the outstanding Loan amount, including but not limited to seeking a court judgment or engaging collection agencies. The Borrower acknowledges the seriousness of default and agrees to cooperate in resolving any disputes or issues related to repayment.
4. Prepayment
4.1 Early Repayment Option
The Borrower retains the right to prepay the outstanding Loan balance, either in full or in part, at any time without incurring any prepayment penalties or fees. Any partial prepayment shall be applied first to outstanding interest and then to the Loan principal. The Borrower understands the benefits of early repayment and acknowledges that it can reduce the overall interest paid on the Loan.
4.2 Prepayment Notification
If the Borrower intends to make an early repayment, they agree to notify the Lender in writing at least 30 days in advance. This notification allows the Lender to adjust the Loan account accordingly and provide an updated repayment schedule if necessary.
5. Governing Law
5.1 Jurisdiction and Dispute Resolution
This Contract shall be governed by and construed under the laws of [JURISDICTION]. Any disputes arising under or in connection with this Contract shall be resolved through arbitration in [JURISDICTION] under the rules of the [ARBITRATION BODY]. The parties agree to abide by the arbitration decision as final and binding.
6. Entire Contract
6.1 Superseding Prior Agreements
This Contract constitutes the entire agreement between the Lender and Borrower regarding the Loan and supersedes all prior agreements, discussions, or understandings, whether written or oral, relating to the subject matter herein. Any amendments or modifications to this Contract must be made in writing and signed by both parties.
6.2 Severability
If any provision of this Contract is found to be invalid or unenforceable, the remaining provisions shall continue to be valid and enforceable to the fullest extent permitted by law. The parties agree to replace the invalid or unenforceable provision with a valid provision that most closely reflects the original intent of the Contract.
IN WITNESS WHEREOF, the Parties have executed this Contract as of the date first above written.
[Your Name]
[BORROWER'S NAME]
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