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Loan Agreement format to lend money to borrower by Lender with or without interest.

Format of Loan agreement to lend money to the borrower for specific period.

Borrowing and lending money is usual in the society. For every transaction it is better to keep a loan agreement signed by lender and borrower and two witnesses to avoid any future dispute and keep a healthy relation. This also gives a feeling of security to both parties.

Sample Format of Loan agreement to give loan to borrower by the Lender is given below.



This Agreement made and entered into at_________ this______ day of_______ 200_


Mr. __________________S/o ___________ R/o___________ (Hereinafter called the Lender) of the ONE PART
Mr. ________________S/o_______________ R/o________________
(Hereinafter called "the Borrower" and reference to the parties hereto shall mean and include their respective heirs, executors, administrators and assigns) of the OTHER PART

WHEREAS the Borrower is in need in need of money for some urgent requirements and hence has approached the Lender to grant her an interest-free loan of Rs.________/- (Rupees ____________________ only) for a period of ____ years;

AND WHEREAS the Lender has agreed to grant a loan to the Borrower, free of interest, as the Lender and the Borrower have known each other since several years;

AND WHEREAS the parties hereto are desirous of recording the terms and conditions of this loan in writing;

NOW THIS AGREEMENT WITNESSETH and it is hereby agreed by and between the parties hereto as under:-

1. The Borrower hereto, being in need of money, has requested the Lender to give him an interest-free loan of Rs.___________/- (Rupees _________________________ only) to enable him to purchase a residential flat, to which the Lender has agreed.

2. The said loan is required by the Borrower for a period of ____ years, commencing from __/__/____ and terminating on __/__/_____.

3. The Borrower hereby agrees and undertakes to return the loan of Rs.___________/- (Rupees ______________________ only), in installments, within the aforesaid period of ____ years and gives his personal guarantee for the same.

4. The terms and conditions of this Agreement are arrived at by the mutual consent of the parties hereto.

WITNESS WHEREOF the parties hereto have hereunto set and subscribed their respective hands the day and year first hereinabove written.



BORROWER ___________________



Friendly Loan

A A friendly loan usually giving to some persons with good relations to help him. It is lending money to your friends or relatives for a personal reason like to help them in the time of financial difficulties. If the loan goes bad, the relationship also sours. Moreover, such a loan is usually interest-free. This means you lose money.


Precautions while giving and taking loan

1. All loan transaction should be through bank transfer, account payee cheque or Demand Draft.

2. Interest free loan should be given from your savings, not from your borrowed funds on which you are giving interest.

3. Check the credit worthiness of the Lender 

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