Lending money to friends is a tricky business. One minute you’re feeling generous and the next you’re wondering whether you’ll ever see that money again. That’s why it’s important to have a written agreement when you lend money to a friend. Here’s what you should include in that agreement.

1. The Amount of the Loan

First and foremost, you need to agree on the amount of the loan. This should be a specific dollar amount, not just a general idea of how much they need. It’s also a good idea to set a due date for the loan, so your friend understands when they need to pay you back.

2. Terms of Repayment

It’s important to discuss how your friend will repay the loan. Will they pay you back in one lump sum or in installments? If it’s the latter, be specific about how much they should pay and when. You may also want to discuss what will happen if they miss a payment or are unable to repay the loan at all.

3. Interest and Fees

You may decide to charge interest on the loan, particularly if it’s a significant amount of money. If you do decide to charge interest, make sure it’s reasonable and that your friend understands how it will be calculated. You may also want to specify any fees that will be charged if they miss a payment or are unable to repay the loan.

4. Security

In some cases, you may want your friend to provide security for the loan. This could be anything of value, such as a car or other asset. If your friend defaults on the loan, you will have the right to take possession of the security in order to recoup some or all of your money.

5. Signatures

Once you’ve agreed on the terms of the loan, it’s important to put everything in writing and have both you and your friend sign the agreement. This will serve as a record of your agreement and will make it easier to enforce your rights if your friend defaults on the loan.

In conclusion, lending money to friends can be a slippery slope, but having a written agreement can help protect both you and your friend. By following these guidelines, you can ensure that both parties understand the terms of the loan and can avoid any misunderstandings or hurt feelings down the line.