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FAQ

RULES & REGULATIONS (9)

Credi is offered to over 50 countries around the world. Credi.com calculates loans in the currency of your selected country and the Credi loan agreement is governed by the law in the country that the borrower resides in. This may mean that Credi is applicable and usable by you.

While a loan agreement between family and friends may not be necessarily a legal document, it does protect both sides if the matter goes to court.

Formalising a loan agreement just means putting in writing something that may have been talked about. This is to clearly identify the relevant interest rates, loan terms and conditions.

Your loan is subject to the lender’s local tax and lending laws, as well as the borrower’s local tax and lending laws.

Credi does not count towards your credit score, but that may change in the future, so treat a loan through Credi as you would any other loan.

While you can give an interest free loan to a family member, financial planners don’t endorse this practice. To minimise pain and conflict, financial planners advise charging interest on the loan, treating it like any other loan. A minimum amount of interest for example, is an amount that will ensure that repayments keep up with inflation. Putting together a contract such as Credi’s loan agreement that leaves out any room for assumptions. Giving an interest free loan to a relative or friend might also fall under the tax definition of a ‘gift’, which has its own rules and regulations you would have to check for your locality.

If the loan is formally agreed upon in writing with a plan to repay it by the borrower, it does not interfere with any taxation. However, if a loan is written off, it counts as a ‘gift’ on behalf of the lender, which does have tax implications. For the borrower, if the loan is forgiven, at that point it becomes classified as income and must be declared for tax purposes.

You can forgive a loan from a family member, however this does affect your taxation. Check your local area’s tax rules about this. For example, in many places a gift over $15,000 incurs a tax for the giver which must be accounted for.

Most loan contracts define clearly how the proceeds will be used. There is no distinction made in law as to the type of loan made for a new home, a car, how to pay off new or old debt, or how binding the terms are. The signed loan contract is proof that the borrower and the lender have a commitment that funds will be used for a specified purpose, how the loan will be paid back and at what amortization rate. If the money is not used for the specified purpose, it should be paid back to the lender immediately.

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