A loan agreement form is a contract between the lender and the borrower. The lender is the person providing the loan to the borrower. The borrower is the person receiving the loan. The loan agreement explains the agreement between the parties, the amount of the loan, the amount of the payments, and when the payments should be made.
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What is a Loan Agreement? The Essential Guide to Loan Agreements Loaning Money to Friends and Family Small Business Loan Agreement ConsiderationsA loan agreement is a contract between a borrowing party and a lending party, such as a bank or other financial institution. There are many different types of loan agreements, however, they all follow a similar pattern. This agreement will protect both parties during their financial transaction, whether it is related to real estate, business, or other finances.
The loan agreement will typically have detailed information about the borrower, including their personal information, creditworthiness, income, and expenses. This information is required in order for the lender to determine if they are willing to proceed with the transaction.
The last section will detail the information about the loan, including the term for the loan, the interest rate, the total amount of the loan, and other financial specifics.
Loans are a common part of day to day finance in our society. Some are large loans provided by banks for home buying or education, while others are to consolidate student loans, or for the purchase of automobiles. The most frequently used type of loan is much smaller in size. These small or personal loans often occur between small businesses and individuals, or among family and friends. It is often said that loaning money is the fastest way to ruin a relationship; however, when you follow a sample loan agreement, you can head off many problems. When you loan any amount of money, be it two hundred dollars or two thousand, it’s important to fill out and sign a loan agreement template.
Why should you use a loan agreement template when loaning money? Because of what can happen when you don’t. When loan agreement templates aren’t followed, the lending party can lose some or all of the money owed with no certain legal remedies. Without following a sample loan agreement, you can also not enforce when the loan is to be repaid; in fact, you could find yourself waiting for years for repayment.
In legal cases involving loans without loan agreements, the court has to try to determine who is telling the truth about the terms of a loan, or even if a loan occurred. Even if you are lending to family or a friend you are certain would never cheat you, it is important to complete a loan agreement template. This loan agreement can work to not only protect your loan, but also the integrity of your relationship.
Also, it tidies up the loan by setting out payment requirements. Is the loan to be paid back in installments, or all by a certain date? Is there any interest being charged on the loan, or late charges if the loan is not paid back?
While these may not be things that lenders want to consider when loaning to someone they trust, it is important to protect both parties when lending money. If the person borrowing the money will not be able to pay it back for several months, they might feel more comfortable with the protection of a loan agreement template that states that prior to the exchange of funds. Filling out and signing a loan agreement template takes very little time and effort, but can prevent many legal and personal problems later on.
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