Borrowing from friends or family feels easy and flexible – no bank queues, no complicated forms. But when things go wrong, relationships suffer more than any financial penalty. A simple written loan agreement can save bonds and prevent misunderstandings.

The document doesn’t have to be overly legalistic. It should clearly mention:

• Amount of the loan,
  
• Date of giving and expected date of repayment,
  
• Interest rate, if any, and how it will be calculated,
  
• Repayment schedule – lump sum or instalments,
  
• Any security or collateral,
  
• What happens in case of delay or default.
  

Both sides should keep copies and use traceable payment methods – bank transfers instead of cash, notes in the description line, etc. This helps if later there is a dispute or tax questions.

If large sums are involved, a more formal agreement, maybe even notarised or registered where needed, is wise. It gives clarity, and ironically, clarity often preserves the emotional relationship.

Money and emotions don’t mix well without boundaries. A small effort on documentation can save family dinners from turning into courtrooms.