One2One Lending provides an automated Agreement Builder™ that assists in the development of a promissory note helping the customer determine the terms and conditions associated with a loan such as interest rate, security, and payment terms. One2One Lending also provides a forms Marketplace where customers can download a do-it-yourself promissory note in word document format.
Learn more about our services at One2OneLending.com.
Wednesday, December 23, 2009
Saturday, September 19, 2009
Never lend more than you can't afford to loose
If you lend your money that you need and you are expecting repayment in a few days if anything goes wrong, you will not have the money you need for food, gas, etc. This will cause a fight between you and your friend. Lend only what you can afford to give away. Then if you don't get paid back right away, you won't be in trouble.
Thursday, March 19, 2009
Decide if the person is trustworthy or not
If your borrowwer is somewhat flaky, then it’s a good idea to lend only a small amount of money or none at all. (There's nothing to say you cannot give some money to this friend, with no expectation of repayment. You can call it a loan if you like, but you can't really get mad if your friend doesn't pay you back, because you gave the money knowing that your borrower was a little flaky).
If the person is trustworthy, then you should take into consideration how much money is requested. You might be willing to lend an amount less than asked for, and if this is the case, say so. Example: "I can't lend you $100, but how about $40?"
Under all circumstances, make sure that you get you loan understanding in writing. Use a loan contract or promissory note to avoid misunderstandings.
If the person is trustworthy, then you should take into consideration how much money is requested. You might be willing to lend an amount less than asked for, and if this is the case, say so. Example: "I can't lend you $100, but how about $40?"
Under all circumstances, make sure that you get you loan understanding in writing. Use a loan contract or promissory note to avoid misunderstandings.
Thursday, February 7, 2008
How to lend money to a family member
A lot of times someone in your family might run into financial trouble, or need a loan for something big. Loaning money to your family is something many people look at as taboo, and the reason is that many times family members will take what was intended to be a loan and turn it into a gift. This simply does not have to be the case. Loaning money to family can be safe, but here's how to ensure that your loan stays a loan -- not a gift:
Start by being very upfront with the person. If they ask for money, your first response needs to be "I will only give it to you if you pay me back!" This way they know that is a condition. Clearly indicating that you expect to be paid back is the first thing you have to do, but not the only.
Along with making the expectation of repayment clean, you need to set the expectation of when you expect repayment to begin. You should take time to sit down with the person and specify when you expect them to start paying you back, how often you expect payments, and in what amount. This puts a clear picture in the borrowers head of what you expect from them, and what they need to live up to if they are going to borrow from you.
Next, take the time to discuss how you would like to handle late or missed payments. You are family, so you will understand when they get sick and miss work, and so money is tight. But, you need to have clear guidelines for these circumstances before they occur. So decide what happens, and stick to it. Also, discuss if your borrower has anything to put up as collateral in case they do not pay you back.
Seek tax advice. Unless you legally gift the money to them, and work out some sort of payback agreement that is under the table, you are going to get in trouble with the IRS. Obviously gifts are gifts, and you can't ask for repayment. However, if you lend the money and do not collect interest, you can get in trouble with the IRS. Get the advice of a tax professional regarding how much interest you should charge to avoid a sticky wicket called "imputed interest." Basically, the IRS defines a loan as a transaction that involves interest -- so even if you don't collect it, the IRS will assume a "reasonable rate" and then hold you accountable for paying taxes on it. This means that loaning someone money without interest can cost you money.
Get it in writing. While no one wants to take family to court, the last thing you want is to be stuck down the line in the midst of a "he said, she said" argument. A contract signed by both parties (and preferably witnessed) is a great way to ensure that the lending terms are clear, and give you a legal foot to stand on if you aren't getting repaid. So, spell it all out, and get it notarized if need be.
If you are worried about a personal loan, make it less personal by adding a third party to make it more formal. You can hire a third-party service such as Virgin Money to add the proper degree of formality to a personal loan. This protects your money, and it can even help the borrowers credit because some of these companies will report their payments to the credit reporting agencies.
Know when to say no. It can be awkward to say no, but lending isn't a responsibility you have just because you are family. If you simply don't have the means to offer assistance, or can't afford not to get the money back, or even if it is simply that lending will cause you undue anxiety, then say, "I can't."
Start by being very upfront with the person. If they ask for money, your first response needs to be "I will only give it to you if you pay me back!" This way they know that is a condition. Clearly indicating that you expect to be paid back is the first thing you have to do, but not the only.
Along with making the expectation of repayment clean, you need to set the expectation of when you expect repayment to begin. You should take time to sit down with the person and specify when you expect them to start paying you back, how often you expect payments, and in what amount. This puts a clear picture in the borrowers head of what you expect from them, and what they need to live up to if they are going to borrow from you.
Next, take the time to discuss how you would like to handle late or missed payments. You are family, so you will understand when they get sick and miss work, and so money is tight. But, you need to have clear guidelines for these circumstances before they occur. So decide what happens, and stick to it. Also, discuss if your borrower has anything to put up as collateral in case they do not pay you back.
Seek tax advice. Unless you legally gift the money to them, and work out some sort of payback agreement that is under the table, you are going to get in trouble with the IRS. Obviously gifts are gifts, and you can't ask for repayment. However, if you lend the money and do not collect interest, you can get in trouble with the IRS. Get the advice of a tax professional regarding how much interest you should charge to avoid a sticky wicket called "imputed interest." Basically, the IRS defines a loan as a transaction that involves interest -- so even if you don't collect it, the IRS will assume a "reasonable rate" and then hold you accountable for paying taxes on it. This means that loaning someone money without interest can cost you money.
Get it in writing. While no one wants to take family to court, the last thing you want is to be stuck down the line in the midst of a "he said, she said" argument. A contract signed by both parties (and preferably witnessed) is a great way to ensure that the lending terms are clear, and give you a legal foot to stand on if you aren't getting repaid. So, spell it all out, and get it notarized if need be.
If you are worried about a personal loan, make it less personal by adding a third party to make it more formal. You can hire a third-party service such as Virgin Money to add the proper degree of formality to a personal loan. This protects your money, and it can even help the borrowers credit because some of these companies will report their payments to the credit reporting agencies.
Know when to say no. It can be awkward to say no, but lending isn't a responsibility you have just because you are family. If you simply don't have the means to offer assistance, or can't afford not to get the money back, or even if it is simply that lending will cause you undue anxiety, then say, "I can't."
Wednesday, January 23, 2008
If you lend money – get it in writing
If you lend money – get it in writing - create a loan agreement and promissory note.
I’m sure that you heard the old adage never mix business with pleasure. Most people prefer to keep their personal and professional lives separate, particularly where money is involved. Poor business decisions or ventures can lead to a rupturing of a friendship and the same holds true in a money-lending situation. Many good friendships have been lost because money has been lent and then misspent or not repaid. But what about situations when there is no one else to turn to? You’re desperate for money and your best friend offers their assistance. Can you afford to turn him or her down? Or what about the reverse - one of your closet friends comes to you with a financial problem and asks for your assistance because they have no other options? Would you feel right turning them away? How can you avoid falling into the pitfalls of mixing friendship and money as either the lender or the borrower? Here are a few tips on how to approach a loaning situation between friends.
• Eliminate All Other Options Before you accept money from a friend or offer money to a friend, make sure that there aren’t any other options you can pursue. Are there other lending companies that will work for your situation?
• Have you cut back your expenses to the absolute minimum or are there some non-essential items that you can do without?
• The most important thing to keep in mind is that borrowing from friends should be your last option, not your first. If you can get it from someone or somewhere else, then you should.
• Treat it like a business arrangement. Use a company such as One 2 One Lending to document and collect your loan. A third party can prove to be very valuable in removing the emotions from a private loan.
• Most friends don’t mind lending the money and helping someone out, but it can be very aggravating to believe that money is being misspent. If you’ve borrowed money from anyone your first priority is to pay that money back.
And if you are the lender, don’t let your frustration build up - make your feelings heard and let your friend know. Introducing One 2 One Lending can act as your voice and maintain a professional relationship.
I’m sure that you heard the old adage never mix business with pleasure. Most people prefer to keep their personal and professional lives separate, particularly where money is involved. Poor business decisions or ventures can lead to a rupturing of a friendship and the same holds true in a money-lending situation. Many good friendships have been lost because money has been lent and then misspent or not repaid. But what about situations when there is no one else to turn to? You’re desperate for money and your best friend offers their assistance. Can you afford to turn him or her down? Or what about the reverse - one of your closet friends comes to you with a financial problem and asks for your assistance because they have no other options? Would you feel right turning them away? How can you avoid falling into the pitfalls of mixing friendship and money as either the lender or the borrower? Here are a few tips on how to approach a loaning situation between friends.
• Eliminate All Other Options Before you accept money from a friend or offer money to a friend, make sure that there aren’t any other options you can pursue. Are there other lending companies that will work for your situation?
• Have you cut back your expenses to the absolute minimum or are there some non-essential items that you can do without?
• The most important thing to keep in mind is that borrowing from friends should be your last option, not your first. If you can get it from someone or somewhere else, then you should.
• Treat it like a business arrangement. Use a company such as One 2 One Lending to document and collect your loan. A third party can prove to be very valuable in removing the emotions from a private loan.
• Most friends don’t mind lending the money and helping someone out, but it can be very aggravating to believe that money is being misspent. If you’ve borrowed money from anyone your first priority is to pay that money back.
And if you are the lender, don’t let your frustration build up - make your feelings heard and let your friend know. Introducing One 2 One Lending can act as your voice and maintain a professional relationship.
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