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[Music] many people need a loan at some point in their life but some might have hindrances like poor credit or other things that may affect their ability to get a formal loan which can put people in a sticky situation asking to borrow money from a family member or friend this very common occurrence can put two close people in a difficult position you see sometimes these loans are paid back and other times they aren't which can lead to big risks in long-standing relationships and after handing over funds the lending party usually feels left out in the cold without any structure or binding promises to pay but there is something that can help preserve familial relations and ensure that money eventually flows back to the lender family loan agreements a family lending agreement or a personal lending agreement if you're not related is a legally binding document between a lender and a borrower that sets up a payment structure on a loan though it may seem a little strange to ask family members to sign an agreement many experts suggest making the process as formal as possible when an agreement is written out it helps to safeguard the transaction and ultimately it can actually help preserve relations between people we've known for most of our lives now you might be asking yourself why does the agreement need to be written a lot of loan agreements have to be put into writing to be enforceable but even if the kind of loan you're thinking about doesn't necessarily have to be put into writing a paper and ink agreement is better than a verbal promise almost every time the value behind written agreements is preventing disputes from springing up in the first place family or personal lending agreements should all contain a minimum of the following the amount of the loan the date the parties involved the loan term the manner of payment installments or another method interest if charged rules for missed or late payments witnesses and signatures let's briefly dive into charging interest which is a hot debate when lending money to family or friends that same feeling that makes people reluctant to write down an agreement for a loan to friends or family may make them hesitant to charge interest but there may be reasons to do so money that is loaned without interest could be earning money if put into another use even if it's just sitting in a savings account for that reason authorities are skeptical of interest-free loans and if a loan is interest-free and over fourteen thousand dollars the internal revenue service will consider it a gift which means that the lender will have to pay taxes as if interest has been charged however whether or not you decide to charge interest can depend on a lot of variables consider things like the length of the loan the amount of the loan and how much before making your decision where e-forms the...