Our contract template contains all the essential points that should be settled between the parties in a private loan agreement:
All about loan
You should set this exactly so that there are no additional claims. Think carefully about the amount of the loan actually required. The lower the loan, the faster it is repaid.
Loan duration : The loan should always be granted for a fixed term. Then it is clear to everyone involved when the loan has to be repaid. Our model therefore has a fixed term, but you can set the length individually. If the term is not regulated in the contract, repayment will only be made after termination by the borrower or lender. The legal notice period is three months (§ 488 Abs. 3 BGB). You can also set a shorter deadline in the contract.
Interest rates: In addition to the interest rate, you should specify the frequency at which the interest is to be calculated and when the borrower must pay interest: at the end of the year or when the loan is repaid. Attention: The interest should be set close to the market rate, otherwise there is a risk that the tax office sees the loan as a gift, which can have unpleasant tax consequences.
Repayment mode: You should agree on whether the loan should be repaid in monthly installments or in one fell swoop after the loan has ended. Our recommendation: Arrange a monthly repayment and specify the number of installments in advance exactly. This reduces the risk that the loan will not be repaid.
Default: Settlements and default interest are common and also reasonable. To late repayment or interest payments justify default interest. They are measured according to the general default rules. According to the law, the regular annual interest rate is five percentage points above the base rate (Section 288 (1) BGB). On the website of the Bundesbank you will find the current base interest rates.
Collateral: For higher loan amounts, the loss of which would be painful for you as a lender, you should insist on collateral. This provides additional protection in the event that the loan is not repaid. Credit security can be agreed, for example, in the form of a security transfer or assignment. The registration of a mortgage in the land register is also possible if real estate is available. But you have to be a notary.
Notarized acknowledgment of debt: Since, in the case of a security, the lender must realize the security himself, you should agree a notarised acknowledgment of debt with enforcement submission for higher loan sums. Thus, the lender must at least not seek judicial proceedings against foreclosure. However, the borrower must be a notary. Only after presentation of the notarial acknowledgment of debt should the loan amount be paid out. For smaller loans a debt recognition is not required.
Termination: Already at the conclusion of the loan agreement, set a time when the money must be repaid. Then a proper termination is not necessary. If the duration of the loan contract is not fixed, it must be terminated before repayment. If the Borrower is in default or fails to deliver the agreed upon security, the Borrower may prematurely terminate the contract for good cause. The reasons for early termination have been listed individually in our contract template.