A private loan is a loan that is taken out without the intervention of an official bank or lender. You lend money from / to a person, usually family or friends. The borrower and the lender are therefore in direct negotiation with each other about conditions such as the term within which the loan is repaid and the interest. If friends or family are not an option, you can sometimes also find private individuals online who are willing to take out a loan.
With a private loan it is important that everything is on paper.
It does not matter whether it is about parents, children or your best friend: if you borrow money from or to someone, everything must be clear and clear. So make an agreement that is watertight and specifies exactly how much the loan is, within what time you will pay it back, what your monthly payment will be (including any interest), when the payment starts and so on. In this way everything is in black and white, which prevents confusion, confusion and quarrel.
An advantage of a private loan is that there is no ‘blacklist’ (CKP registration). This list is maintained by the National Bank of Belgium and the Professional Association of Credit. If you want to borrow from a bank, it will check whether you have a CKP registration. This is a list of names of people who have not paid off their loans on time. Once on the list, banks are less willing – especially when it comes to large loans – to provide you with a loan; you are seen as ‘risky’. By taking out a private loan, you avoid that check. With a private loan, the conditions are therefore often more lax.
Something that many people do not know is that the lender does not have to charge interest. And if interest is charged (usually a fixed interest rate), the final costs are often lower than at a financial institution. You can also often take longer to pay off, so that the borrower gets a little more air during months when the finances are on the tight side. In addition, these types of loans offer tax benefits. However, you must declare the loan to the official authorities in order to enjoy it.
Private loans have broken relationships, collapsed friendships and created family problems. So think carefully before you ask or give special people in your life for a loan, and put everything on paper. Play an open card and discuss any problems that may arise. With loans between strangers it is important that you know the background and reputation of the other person to make the process run smoothly and safely. Although banks do not provide private loans, many offer the possibility of assistance with the agreement. On their website there is often a model contract that you can already view. Once the contract is done, you no longer need the bank. This type of loan therefore always remains interesting.