Loan from a private person
A loan from a private person is one of the oldest financial deals: simpler than a bank loan, but with its own logic of proof. Below: how the money reaches the other side, how much the deal costs, and how to arrange it so there is no dispute later.
What a loan from a private person is
A loan from a private person is a deal in which one individual hands money to another with an obligation to repay. Neither side is a bank or a licensed lender, so the parties set the terms — amount, term and interest — themselves. In Lithuania the deal is governed by Articles 6.870–6.875 of the Civil Code: the agreement is deemed concluded from the moment the money is handed over. The general logic — on the page private loans.
How the money reaches the other side
The transfer method determines whether it will later be possible to prove the money was handed over at all — more important than the amount itself.
| Method | Provability | Risk | Recommendation |
|---|---|---|---|
| Bank transfer | High — a statement with date, amount and reference | Low if the reference names the agreement date | Recommended for any amount |
| Cash with a receipt | Medium — valid only with a signed receipt | Medium — a receipt can be lost or disputed | Acceptable for small amounts between trusted parties |
| Transfer to a third party | Low — formally the money reaches another recipient | High — hard to prove the link to the borrower | Avoid unless the reason is fixed in the agreement |
| Cryptocurrency | Low legally — a blockchain record is not a bank statement | High — rate swings, hard to tie to an agreement | Not recommended where legal certainty is needed |
Practical rule: transfer by bank and put “Loan under agreement of dd.mm.yyyy” in the reference. The same reference goes in repayment payments to separate principal from interest.
How much a loan from a private person costs
The cost is the interest over the whole term. Below are examples computed with the annuity formula (the same one the calculator uses).
| Amount | Term | Rate | Monthly | Overpayment |
|---|---|---|---|---|
| €300 | 6 mo | 25%/yr | €53.71 | €22.26 |
| €1,000 | 12 mo | 20%/yr | €92.64 | €111.68 |
| €2,500 | 18 mo | 18%/yr | €159.52 | €371.36 |
| €5,000 | 24 mo | 15%/yr | €242.48 | €819.52 |
The steps
- Find an offer in the listings or post your own with an amount and term;
- Contact the other side and agree the terms;
- Verify each other's identity from the original document;
- Conclude a written agreement in two copies;
- Transfer the money with a reference to the agreement;
- Repay on schedule, documenting the last payment.
Legal basis and taxes
The deal is governed by Articles 6.870–6.875 of the Civil Code. A written form is not mandatory for validity, but without it proving the terms in a dispute is practically impossible. Interest is the lender's taxable income (GPM 15%), declared to the State Tax Inspectorate (VMI); the principal is not taxed. Systematic lending for profit requires a Bank of Lithuania licence — wider context on the page legal basis.
The key safety sign
If someone asks you to pay anything before receiving the money — a “processing fee”, “insurance” or “commission” — it is a sign of fraud, not part of the deal. A real private lender has no reason to take money from the borrower before issuing the loan.
Frequently asked questions
Is a loan valid without a written agreement?
Yes — it arises on handing over the money. But without a document you must prove both the amount and the terms in a dispute.
How to transfer money most safely?
By bank transfer with a reference to the agreement. That leaves a clear trail with date and amount.
Is there tax on the interest?
Yes, the lender declares the interest received and pays GPM 15%. The loan sum itself is not taxed.
How much does posting a listing cost?
Borrowers: the first 5 listings are free, then €3; lenders: €5 from the first listing. The fee is only for posting, never on the amount: pricing.
Does the portal issue loans?
No. We are a classifieds portal: we publish listings but do not issue money and do not take part in the deal.