Many people prefer to opt for loans between individuals to escape the often complicated procedures of banking institutions. This type of funding quickly became popular because of the many strengths it provides. The lender benefits from a high rate of return, and the borrower benefits from a competitive interest rate. In short, everyone wins! The loan to the individual is subject to the same rules as traditional loans. Certain formalities must thus be respected at the time of the loan application.
Write a credit agreement
It is necessary to formalize the loan agreement in writing, even if the transaction is between two people who know each other. To do this, the lender and the borrower are required to draw up a credit agreement that will be useful in the event of a possible problem in the future. The loan agreement must contain the following information: identity of the lender and the borrower, amount of credit, terms of repayment and rate applied.
The interest rate is set freely by both parties under a particular credit. It can be zero, and must not exceed the regulatory wear rate. Namely that a loan between individuals over 760 euros must be declared to the tax authorities. Failure to comply with this rule is punishable by a tax fine of 150 euros.
Respect the necessary formalities
The preparation of certain documents is necessary to guarantee the repayment of the sum borrowed. This may be a debt acknowledgment or a notarized mortgage agreement. Note that the recognition of debt must be established in 3 copies and under private seal. The mortgage loan agreement is a strong guarantee of the borrower’s commitment.
These coins will be of great use in case of default of the borrower. Moreover, it should be known that in the case of a loan between individuals with interest, the borrower must initiate a tax procedure to declare the loan and the interest he pays. The lender, for its part, has the obligation to serve the amount of interest that it receives when it declares its income.
Go through a credit institution: a possible alternative
It is possible to apply for a loan between individuals from certain credit institutions. These organizations intervene as an intermediary between individuals wishing to carry out a loan operation. Such an approach allows borrowers to access financing proposals tailored to their needs. For their part, lenders benefit from a secure approach to the investment of their funds.
To apply for financing through a credit agency, the borrower can start by comparing the available proposals. The realization of a simulation is practical to find the best offer. Once he has found a suitable offer, the borrower can send his request and wait for an agreement in principle. Finally, the presentation of supporting documents (copies of identity, proof of income, statements of account …) may be requested from the borrower to finalize the loan agreement.