Loan to friend

709 votes

Every Loan is a Loan. A Loan to a friend is no different to any loan, and it can be charged with interest. A Loan Agreement can be as simple as You stating and promising that you're giving a loan to your friend on a particular date, for a particular purpose, charged with a certain sum of money, and he promising that he'll return the loan taken by you on this date, out of his own will, and charged with the rate of interest, payable by particular date, in presence of 2 witnesses. You can write this in your own hand as well, on a piece of paper. You would need to have the signatures of 2 witnesses as well. And please mention the security as well. This piece of document is valid as evidence in the Court of Law.

LawRato LawRato

630 votes

always have a written agreement on loan and if possible take PDT cheques to secure your loan amount,make the agreement notarized and clearly mention the interest amount and the date on which loan matures.

Advocate Nitish Banka LawRato

926 votes

You can not charge interest as it is not legal, but you may help your friend through interest free loan (friendly loan). Yes, you can enter into the agreement with your friend but the contents must be very specific and no interest clause should be there. There are following points which you may consider :
1. Complete details of both the parties, especially of borrower;
2. Interest free friendly loan clause and amount of loan;
3. Tenure of loan;
4. Mode of providing loan ;
5. Mode of repayment of loan;
6. Remedies in the case of default;
7. Jurisdiction of court or you may have arbitration clause.
8. Guarantor details;
9. Witness is most important and details of witnesses.
10. You must get registered the loan agreement or notarize the same.

You should mention the details of this advance / loan in your income tax return which will help you to prove your case, in case of default.

Advocate Jatin Sharma LawRato

502 votes

Yes it is allowed.. Since loan agreement is a customised document which i cant provide you. Templets are also abvailable online but they are not foolproof and full of lacunas. I hope i have made my point clear.kindly note you cant give more than 20000 in cash . It is not allowed.

Advocate Nupur Goswami LawRato