What Is a Loan Receipt?
A loan receipt is a formal or official receipt that documents the financial transaction between a lender and a borrower. The former loans money to the latter for all kinds of reasons. The document serves as proof or evidence that the borrower received the money from the lender.
According to an online article by The Ascent, the number of people with personal loans has nearly doubled in the last decade. From 11 million in 2010, around 21 million people took out personal loans in 2020. From $55 billion, personal loan debt has also ballooned to $162 billion. The same article reported that the average amount of personal loan debt per borrower has evidently increased from $8,618 to $9,025.
Types of Loan
People take out loans for various reasons. Loans can be classified according to different categories as well. There are several different types of loans, with each serving a different purpose. The following examples describe just some common and universal examples of loans.
Home Loan. Buying a house does not come easy nor cheap. Yet there are many people who dream of owning their own house or apartment. Fortunately, there are alternative and flexible ways an individual can own a home apart from purchasing it upfront. Many financial institutions and organizations help make it more convenient for people to buy a home. With different payment structures and alternative payment methods available, it has become relatively easier for people to buy a house of their own. Although this comes with several strings and conditions. A common home loan can come with a lot of requirements and documents before it is granted. There are also serious consequences if the borrower is unable to pay their mortgage or fails to pay back the loan in full. A house that is purchased with a loan can be foreclosed and the individual can end up losing the house altogether.Personal Loan. Personal loans can range in amount and can be used for various reasons. Taking out a personal loan is a personal choice, but it is also a responsibility. If you choose to borrow money for whatever reason, you need to be responsible enough to pay it back on time. Whether it is a meager amount, a personal splurge or an emergency expense, spending money that is not yours to begin with requires accountability and prudence. As stated earlier, the broad definition of personal expenditure means that it can cover all types of things. From groceries to vacation trips to school tuition, personal expenses would depend on individual circumstances and needs. Personal loans can also be obtained in various ways. Banks and lending firms can offer salary loans which can be considered a personal loan. Or in other cases, even simply borrowing money from a relative or advancing cash from a friend can be a form of personal loan. Student Loan. The price of quality education does not come cheap. Unless you are able to obtain a full scholarship, attending college or university will always incur some expense. In the United States, more and more young people take out student loans just to fund their education and stay in school. State or federal aid is just one source of funding. A student can either have a state-funded education or they can be sponsored by a private institution or donor. If an individual shows high academic potential or exhibits superior athletic ability, these are the types of students who usually can qualify for scholarships. But for the average student, academic formation and education come with a cost. Those that cannot afford expensive tuition fees are usually left with no choice but to either enter the labor force or apply for a student loan. It is also quite common for college or even high school level students to attend school and work at the same time just to support themselves. Credit Cards. Perhaps the most common and universal form of loan is the credit card. Millions of people around the world own credit cards. They offer convenience and having one comes with different perks as well, depending on your bank or arrangement. There is no question that credit cards come with advantages. However, like all things, owning a credit card has pros and cons. It may be a convenient way to pay for different expenses, but it must always be used responsibly. The individual holding that card should understand that a credit card is not a license to spend freely and carelessly. Essentially, the premise is that you are using money that you do not yet have. In other words, when you use your card, you are paying on credit. It is unlike a debit card wherein the amount that is spent is money you already possess. Another reason to be extra wary when using credit cards is due to the hidden charges and late penalties that you can potentially incur. This adds extra cost and sometimes, doubles the burden.
Tips for Borrowing and Lending Money
As discussed in the previous section, taking out a loan requires prudence and diligence. Borrowing money is a responsibility. You have the responsibility of paying back the loan and upholding your end of the bargain. For lenders or loaners, you also have to understand the risks involved and must ensure your protection and interests. The following examples are some simple yet effective tips to keep in mind for loan transactions.
Always prepare a written agreement. When it comes to financial transactions, preparing a formal contract is always a wise move. This does not only protect both parties, it can promote clarity and accountability as well. Loans and debt are subjects that should not be taken lightly. Especially if the amount being borrowed is significantly large, a verbal agreement is usually not enough. The meat of your written contract should contain specific provisions and terms that both the lender and borrower can mutually agree to. These stipulations should be enumerated and clearly stated. If you are unsure of how to craft a written loan agreement, you can easily browse and download a sample template to use as a reference guide. Pay on time. A straightforward yet important tip to remember is to always pay on time as much as possible. This is especially applicable to credit card payments and monthly billing statements. Paying your dues in a timely manner can help you avoid late fees and penalties. Most banks and similar institutions charge all kinds of fines for violations including late payments. In some cases, there are also hidden charges that you may not even be fully aware of. To be on the safe side, try to settle your credit card bills and other debt on time as much as possible. If you allow late fees to pile up or let yourself accumulate more debt, you will only be placing a heavier burden on yourself. Being punctual and diligent in your payments can save you a lot of unnecessary stress and problems. Pay in cash or debit card whenever possible. If you are really concerned about avoiding any kind of debt, the safest way to do so is by using cash, debit or any form of payment that has nothing to do with credit. Credit cards make it easy to spend and purchase. With one swipe of a machine, you can satisfy any impulse, want or need. But if you do not want to take on debt, credit cards and loans should only be your last resort. Unless you are faced with an emergency or have no other option, try to avoid falling into the debt trap. If you have to incur some debt, make sure you are responsible enough to pay back your loans and settle any pending payments. Again, as previously discussed above, using a credit is essentially spending money you do not yet have.
How to Create a Loan Receipt
To create a loan receipt, you need to have had a prior agreement with whom you are transacting business with. And if you are looking for quick and easy receipt templates, you can easily download any of the available receipt templates above. Simply choose one that suits your needs then follow the basic steps below.
Step 1: Decide on a Format
The first step in creating a loan receipt is to decide on a format that will work for you. You can always use standard receipt templates or if you prefer to make your own design, that would work just fine as well. But by using a ready-made template, you can save a lot of time and effort versus starting from scratch. Alternatively, you can just use a standard receipt layout then customize the fine details or content of your receipt. Whatever you decide, just be sure that your format is consistent and comprehensible. The format should help the receiver or recipient understand the document easily.
Step 2: Indicate the Basic Details
Once you have established a clear format, the next step is to cover the basic details in your loan receipt. In a simple loan receipt, usually the date, name and amount are what matters. But depending on individual needs and circumstances, you can also indicate other secondary information. In some cases, the receipt number is indicated at the top of the document. Contact information can sometimes be included as well. In a loan receipt, it is typically stated in the first few lines of the receipt that a specified amount was received from the money lender. Be sure to write the complete name of the lender in the receipt.
Step 3: Include Notes or Conditions
After completing all the essential details, the next step is to enumerate any notes or stipulations that may be applicable. It is not always required, but some people find it necessary to include reminders or disclaimers in their receipt. You can list these notes below the basic information. Make sure they are organized and the font size is appropriate. Generally, conditions or notes are considered secondary, so the text size should be smaller in comparison to the basic information in the previous section. Aside from terms and conditions, you can also incorporate a table detailing the loan amount. A simple table that contains the description and value will work just fine.
Step 4: Leave Space for the Signature
After covering all the primary and secondary details in your loan receipt, do not forget to allot adequate space for the recipient to affix his or her signature. Make sure to leave enough space at the bottom of the document for the borrower to sign, indicating that he has received the loan amount indicated in the receipt. You can include a single line for them to sign on. A separate line for the date may also be placed beside it.
What is a loan receipt?
A loan receipt is an official written receipt that a lender issues a borrower for a loan amount. It is a key part in the important process of documentation to protect both the lender and borrower.
What is receipt of payment?
A receipt of payment is a standard protocol whenever there is a financial exchange or transaction. The recipient of the money is usually issued a formal or official receipt of payment.
How do I write a loan agreement?
To write a formal loan agreement, you need to establish the identity of both the borrower and the lender. Once you have identified the parties entering into the agreement, indicate the amount borrowed, outline the different responsibilities, and enumerate the specific stipulations of the contract.
A loan receipt is essential for documenting the financial transaction of lending, borrowing, and advancing payment. If you are looking for quick and convenient templates to use as reference, browse the wide selection of sample templates above and customize your own receipt today!