Friendly loan is an usually informal loan between friends or family. That kind of loan is can be documented, however it is rare to do so. In most cases friends agree orally. Therefore failure to return loan cannot be legally challenged.
Such a loan isn't reported to institutions that monitor credit level, thus it doesn't impact credit score. In some countries such a loan is a subject to taxation, but if no document is created it is difficult to prove that tax should be paid.
- Eichengreen, B., & Mody, A. (2000). Would collective action clauses raise borrowing costs?] (No. w7458). National bureau of economic research.
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