Whether you want to lend a thing or money to someone, or if you are looking to receive something on loan, in this guide we show you the different types of loans available to you . We also show you the different ways of making a contract that is in accordance with the law and binding on both parties. We will specify the terms of the operation and thereby avoid possible future misunderstandings.
Definition of loan contract
A loan is the financial operation in which an entity or person delivers to another a fixed amount of money at the beginning of the operation, with the condition that it returns that amount, together with the agreed interest, if applicable, within a certain period of time.
So, the loan involves two parts:
The lender, person or company that leaves the money.
The borrower, who needs the money to do some management.
Types of loans: simple and commodatum
We can find different types of loans. Depending on the situation, we will use one contract or another:
If a certain thing is lent to use it for a certain period of time with the condition that it is returned when the term is reached, the loan is known as a Comodato.
If money or something else is lent, with the condition of returning an amount of the same kind and quality, we will be facing the simple or “Mutual” Loan.
Let’s see carefully what are the characteristics of each one:
Also known as a loan of use, it consists in delivering to another money or other thing with the condition that it is returned within a certain period of time of the same kind, quantity and quality. The loan is entered into through a contract, and it is usual for the operation to be guaranteed or guaranteed. If compensation interests are agreed, they will be charged on the total of the borrowed money. Our civil legislation also allows us not to pay interest, making the loan free of charge:
The loan will be simple and free, when the borrower is not obliged to pay any compensation against the received.
It will be an interest loan when a payment must be paid consisting of an amount of money or other goods. The remuneration through the payment of interest will vary depending on the duration of the loan. The interest rate applied may not be less than the legal interest of the money, nor more than 2.50 times this. For example, if the legal interest in 2017 is 3%, at most you can agree an interest of 7.5% (3% x 2.50% = 7.50%).
The repayment of the loan is usually made through regular installments (monthly, quarterly, semi-annual …) or in a single fixed term. Therefore, the operation has a previously determined life.
When money is lent to a company or self-employed, the lender must be registered as a professional and VAT withholding in the Tax Agency (model 036), since they are required to declare VAT,
The loan is a contract in which one party gives the other one thing, free of charge, to make use of it during a time agreed. After that time, you must return it in the same state it was received, or return another of the same kind. If there were counter-provision, that is, the payment of a fixed price, we would no longer be talking about a loan, but a lease. We should not confuse it with the usufruct, since while in the usufruct the usufructuary can become the owner of the perceived fruits, in the non-loan.
Documentation to keep in mind when concluding a loan contract
To avoid later problems, we recommend taking the following precautions:
1. Document the loan in writing (you can use our free model here )
2. If interests are agreed upon, the loan must be formalized by delivering the written document in the settlement area of the Treasury Office of our Autonomous Community. This procedure is exempt from taxes, that is, it will not have any cost for the parties.
3. Document the delivery of money from the lender to the borrower (through bank transfers, personal checks, etc.). The repayment periods or loan repayment installments must also be documented.
With this, we will avoid future complications, and we will make sure that everything is collected and justified before administrations.