One of the certainties left in some countries by the great economic crisis of recent years is that the family is a fundamental pillar were to rely on in the worst times. Without the help of those closest to them, many would not be unable to pay a mortgage or make ends meet. There are many cases of parents who have left money to their children to meet occasional expenses. But what happens when you need more than a small amount? He or She can go for Payday loan from direct lenders to get the best interest rates or even consider bad credit installment loans. For these circumstances, there is the so-called family loan, in which one relative leaves money to another generally on more advantageous terms than banks. If you are thinking of formalizing a credit of this type below you have everything you need to know before doing so.
As noted above, through a family loan, a relative, usually a parent, leaves money to another, usually a child, provided it is repaid in installments over a certain period of time. This type of credit has the advantage of not having to go to a bank that in recent years were more reluctant to lend money. In addition, interest is normally not charged, which means savings for the debtor.
How to formalize a family loan
The first thing you have to do is formalize the family loan with a contract. A document that collects the amount borrowed, the installments that are established, the maturity of the credit and that occurs if it is not returned on time. It can be a contract between individuals if they do not want to pay the notary. On the OCU website you can find a standard document that can be used as a basis.
It is very important to reflect whether or not the family loan has an interest so as not to have problems with the Treasury. If there is no interest, neither party should pay anything to the Treasury. But if the lender charges for leaving the money, then you will have to declare it to the Treasury as a return on capital.
It is also important to be able to prove that the family loan has been repaid, for example through a transfer receipt, and that it has a reasonable repayment term. This is to make it clear to the Treasury that what is being done is a credit and not a hidden donation to avoid paying taxes.
In addition, both parties ensure that everything is legal and is recorded in writing to avoid problems in the future. And it is that before asking for a family loan you have to think well the consequences that can have, if it will end up having repercussions with your loved ones. Similarly, the lender must be aware that leaving money does not give him or her the right to interfere in the debtor's financial affairs. Sometimes it is not easy to separate the family and the money, keep this in mind.
If you prefer to keep your family separate from your financial matters, you always have the option to ask for a credit in HummingbirdLoans and have the money in a few minutes in your account only following a simple process.