What terms be included in agreement while lending to keep money safe?


I want to lend money to a friend and take monthly EMI for the interest from him and keep the principle amount secured to take it back later. What all precautions should I take and what should be the key terms of my agreement so that my money is safe?

 

Answer

 

Kindly make a comprehensive document and the terms and conditions have to be mutually decided so as to ensure that your money is safe, however the key terms should be with respect to

 

i. Acceptance of the loan amount
ii. Amount of interest
iii. Payment schedule (this should be clear and unambiguous)
iv. Mode of payment
v. Recourse in case of default
vi. Governing law of the Loan Agreement.

 

Kindly take care that there should not be any void terms in the agreement or terms which are contrary to the law.

 


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