The loan of money is an operation where one person gives money to another provided that it reimburses it later. This loan may be for free or for consideration. A loan of money for consideration is a loan that carries an interest rate.
How to use this model?
The document is only valid for non-professional purposes.
It is addressed in case one or more individuals wish to help another person by lending him money.
Loans between individuals are often done informally, through mutual trust in family and friendship. However, the informal loan poses several types of problems. It can lead to misunderstandings about the date of repayment, the regularity of payments … In extreme cases, in the absence of a written document, it will even be difficult to prove that the loan was one, not a gift on the part of the person who lent money.
It is therefore advisable, even among individuals who know each other (family, friends), to draw up a loan contract .
The cases provided by our model
Our model provides that the contract can be concluded with one, two or three borrowers.
The document allows, if the money is loaned for a specific use that the borrower will have to respect, to specify this usage in the contract.
The document also makes it possible to predict that the loaned amount will be increased by interest for its repayment. Regarding interest, it is important to note that:
- The increase in the amount of interest and the interest rate must be included in the contract. Failing this, the increase by interest is not legally valid.
- The rate of interest stipulated in the contract shall not exceed the rate of wear. The usury thresholds are published on the government’s website .
The document makes it possible to predict whether the sum loaned will be repaid in one installment, in several installments, or as soon as the borrower has the means to repay.
Finally, the document allows penalties to be applied in the event of a delay in repayment , ie the amount to be reimbursed will be increased by an interest at the legal rate (if applicable, this interest is cumulated with the interest rate set by the parties).
The lender may also ask, to guarantee the repayment of the loan, that the borrower presents a bond. If this is the case, the surety bond and the name of the surety will be mentioned in the loan agreement.
The amount of the loan must be reported to the tax authorities when the loan agreement provides for interest. The borrower will be required to make a declaration on Form 2561, “Summary Statement of Securities Transactions and RCM (IFU)”, and the lender will be required to disclose the interest received on his income tax return.
Where the sum loaned exceeds EUR 760 or if the same person has contracted several loans each of which is less than this sum but whose total amount is more than EUR 760 in a year, the loan contract must be declared to the tax authorities on a printed form ° 2062 “Declaration of loan contract”.