Personal loans pose problems that commercial loans do not. Standard bank loans are seen strictly as the business transactions. On the other hand, some debtors see personal loans as something that can be paid whenever they please, or not at all. This situation can become a financial burden on the lender. It can also destroy a friendship or family relationship. Closing a personal loan is best done with a certified letter. Remain calm, remember that the loan is a business transaction and rely on your written contract.
Address the letter just as you would any business correspondence. Place the date of the letter on the top, right side of the page. Put the debtor's name, address and other contact information at the top left side of the page. Add your name and contact info under theirs. Make a note stating that the letter is in reference to the personal loan that the debtor received from you.
Announce your intention to close the loan and end the debt. List any outstanding balance along with the date you would like to receive this money.
Give the recipient 30 days to comply or respond to your letter. Refrain from contacting the debtor during this period, but do not hesitate to talk to them if they call you.
Send the letter via certified mail with a copy of the loan agreement. Keep the original loan agreement and a copy of the letter for your files.
Remain cordial but professional at all times in person, on the phone and through written correspondence. Never lose your temper and never make the situation personal. Remember that a loan, even between friends, is a business transaction.