Checklist for the Lender
You must verify the identity of the borrower.
- You must know the borrower’s personal details (e.g. national identification number, telephone number, address, etc.).
- If the borrower has designated a person with power of attorney such as the case of borrowing money in the name of his or her spouse, you must contact the borrower directly to make sure that he or she intends to borrow money and you must also verify the agent’s identity and the power of attorney.
You must properly prepare a promissory note.
- On the promissory note, you must specify essential terms such as (1) principal sum; (2) interest; (3) repayment date; (4) place of repayment; and (5) forfeiture of benefit of time.
If you are not sure about the borrower’s repayment ability, you may take a security for the loan.
- If you are not sure about the borrower’s repayment ability, you may require the borrower to provide either personal security such as a joint guarantee or real security such as a mortgage.
It is advisable that the promissory note be notarized to ensure its evidential admissibility and for safekeeping.
- You may notarize the promissory note for its evidential admissibility and for safekeeping.
- Notarization may be done by endorsement on the loan agreement, or by preparing the loan agreement in the form of a ‘deed’ from the outset.
Checklist for the Borrower
You must verify the identity of the lender.
- You must verify the identity of the lender.
· In particular, if the lender is not registered under the “Act on Registration of Credit Business, etc. and Protection of Finance Users,” the lender’s business activity shall necessarily be restricted under the “Act on Registration of Credit Business, etc. and Protection of Finance Users.”
You must properly prepare a promissory note.
- On the promissory note, you must specify essential terms such as (1) principal sum; (2) interest; (3) repayment date; (3) place of repayment; and (4) forfeiture of benefit of time.
It is advisable that the promissory note be notarized for its evidential admissibility and for safekeeping.
- You may notarize the promissory note for its evidential admissibility and for safekeeping.
- Notarization may be done by endorsement on the loan agreement, or by preparing the loan agreement in the form of a ‘deed’ from the outset.
If you make repayment, you must receive a receipt and keep it safely for a reasonable period of time.
- If you make repayment of your debt in full or in part, you must receive a receipt (Article 474 of the Civil Act).
- In order to prevent double repayment, you must keep the receipt during the limitation period, which normally expires after 10 years unless the right of claim is exercised by the claimant. (Article 162-1 of the Civil Act)
You must beware of illegal debt collection.
- Some debt collectors use illegal debt collection tactics such as assault or threats. These may lead to criminal prosecution.