In today’s article I will discuss the subject of termination of the loan agreement. This issue is regulated by the provisions of the Civil Code. When terminating a loan, you must not forget about a few very important rules (more on that in a moment). The article also includes a model notice of termination of the loan agreement, which should be downloaded, printed, completed and sent to the debtor by registered mail with acknowledgment of receipt.
I will start with the fact that the loan agreement can be concluded in any form and it can be:
- verbal agreement,
- written agreement,
- or implied.
What is termination of the loan agreement?
Termination of the loan agreement consists of a unilateral declaration of intent, from which it will be clear that the borrower is requesting their return, the declaration may start with the words.
The loan agreement can be terminated in 3 ways:
- By agreement of the parties – this is the simplest termination of the loan agreement, ie both parties agree that they want to terminate the loan agreement. Then the debt is repaid on the terms agreed by the parties. Termination of the loan agreement by mutual agreement may take place at any jointly agreed date.
- Under the terms of the contract – the loan contract may, in addition to the amount and repayment date, specify the situations in which the loan contract will be terminated. It does not matter whether it is a fixed-term or indefinite loan agreement.
- Under the terms of the Civil Code – these are only loans granted for an indefinite period, then Article 723 shall apply. If the repayment deadline is unspecified, the debtor is obliged to return the loan within six weeks of termination by the lender. The deadline should be calculated from the day on which the loan was terminated.
Who can terminate the loan agreement?
The loan may be terminated only by the lender. The lender and the borrower are connected by a loan agreement, which may be terminated within the period specified in the agreement itself, or with a six-week notice period. What is also worth mentioning is the fact that the Consumer Credit Act provides that two unpaid installments may be the reason for termination of the loan agreement.
The option to terminate the loan after two unpaid installments expires if the lender was aware that the borrower was in poor financial condition at the time the loan contract was being signed.
How to terminate a private loan?
If it is eg a family loan agreement, private loan or parent loan – these types of loans are subject to exactly the same regulations as the loans concluded between the consumer and the loan company, bank or parabank. If the loan you granted did not include a repayment date, ie it was an indefinite loan.
How to terminate a loan step by step:
- Send the borrower by registered mail with acknowledgment of receipt the termination of the loan agreement, the specimen of which was given above. If the loan was concluded verbally, then you continue to do the same by sending the borrower the termination of the loan!
- Wait 6 weeks, if the money has not yet been returned by the borrower, it is time for another letter, this time it will be a pre-trial call to return the borrowed money, ie demand for payment. Request for payment – template 10.00 USD – I am buying access to the design Click to pay or choose another pattern Added to cart
- Further failure by the borrower to refund the amount of money will result in the submission of a claim in court for payment. Claim for payment 10.00 USD – I am buying access to the design Click to pay or choose another pattern Added to cart
Termination of the loan agreement is nothing difficult, I hope that I discussed this issue quite clearly and precisely. Just use the right forms and watch the deadlines, and the money recovery process should not be too difficult and complicated! Good luck!