Many personal loans in person to person loans have destroyed families and friends previously, But if a friend comes to you and asks you for a loan then you would definitely feel like asking for collateral for staying at safe side, but you feel shy to ask about that. In that case, you can ask for Tax return as collateral from them because of it one reliable form of collateral and you will be on the safer side as well.
Step by step guideline for a loan using a tax return as collateral
Here are some steps you can ask your borrower to bring and the whole process that will be helpful for you to give a loan using a tax return as collateral:
- When you re going to lend the money to the borrower, ask him to bring the tax return statement with him as collateral. The tax return should be of last 2 years. This tax return will give you a clear idea that how much tax return your borrower will receive in the coming years.
- Then, what you have to do is take these documents to an accountant or a person who is a tax preparer to make a rough estimate of the refund size.
- Next, you have to write a loan agreement in which you have to write everything related to this loan, the amount you gave to the borrower, the interest rate you are receiving on the loan and the date of refund. A legal notice should be prepared.
- When the borrower will receive the refund. It usually takes 2 weeks in most of the cases through the mail or any other process.
- You can also do it in this way that, you can hold any other second item of the borrower at collateral if you find it necessary. An example of this can be that if your borrower is desperately asking for some money and he can pay it in next 2 months through a tax refund, what you can do is hold his second car in the time period of the tax return.