A loan agreement is a written agreement between a lender and a borrower. The borrower promises to repay the loan according to a repayment schedule (regular payments or lump sum). As a lender, this document is very useful because it legally obliges the borrower to repay the loan. This loan agreement can be used for business, personal, real estate and student loans. Acceleration – A clause in a loan agreement that protects the lender by requiring the borrower to repay the loan (both the principal amount and accrued interest) immediately if certain conditions occur. Default – If the borrower defaults due to non-payment, the interest rate under the agreement, as determined by the lender, will continue to accumulate on the loan balance until the loan is paid in full. Borrower – The person or business that receives money from the lender, who must then repay the money under the terms of the loan agreement. Lend money to family and friends – When it comes to loans, most refer to loans to banks, credit unions, mortgages, and financial aid, but people hardly consider getting a loan agreement for friends and family because that`s exactly what they are – friends and family. Why do I need a loan agreement for the people I trust the most? A loan agreement isn`t a sign that you don`t trust someone, it`s just a document you should always have in writing when you borrow money, just like if you have your driver`s license with you when you drive a car. The people who prevent you from wanting a written loan are the same people you should care about the most – always have a loan agreement when you lend money. Depending on the amount borrowed, the lender may decide to have the contract approved in the presence of a notary.

This is recommended if the total amount, principal plus interest, is greater than the maximum rate acceptable to small claims court in the parties` jurisdiction (usually $5,000 or $10,000). Once the agreement is approved, the lender must disburse the funds to the borrower. The borrower will be held in accordance with the signed agreement with any penalties or judgments to be decided against him if the funds are not repaid in full. Depending on the loan that has been selected, a legal contract must be made by stating the terms of the loan agreement, including: An individual or company may use a loan agreement to set terms such as a amortization table that lists interest (if any), or by detailing the monthly payment of a loan. The most important aspect of a loan is that it can be customized at will by being very detailed or just a simple note. In any case, each loan agreement must be signed in writing by both parties. A Parent Plus loan, also known as a “Direct PLUS loan,” is a federal student loan obtained from the parents of a child who needs financial assistance for their studies. The parent must have a healthy credit score to receive this credit. It offers a fixed interest rate and flexible loan terms, however, this type of loan has a higher interest rate than a direct loan. Parents would usually only receive this loan to minimize the amount of their child`s student debt. Simply put, consolidation means taking out a substantial loan to repay many other loans by having to make only one payment per month. This is a good idea if you can find a low interest rate and want simplicity in your life.

. Secured loan – For people with lower credit scores, usually less than 700. The term “secured” means that the borrower must provide a guarantee such as a house or car in case the loan is not repaid. Therefore, the lender is guaranteed to receive an asset from the borrower if it is repaid. Security – A valuable item, such as a home, is used as insurance to protect the lender in case the borrower is unable to repay the loan. Not all loans are structured in the same way, some lenders prefer weekly, monthly or any other type of preferred calendar. Most loans usually use the monthly payment schedule, so in this example, the borrower must pay the lender on the 1st of each month, while the full amount is paid before January 1, 2019, giving the borrower 2 years to repay the loan. I Owe You (IOU) – The acceptance and confirmation of money borrowed from one (1) party to another. There are usually no details on how or when the money is repaid, or lists interest rates, payment penalties, etc. Once you`ve gotten your full credit history, you can now use it to attract potential lenders to get money.

Personal Warranty Waiver – Releases the guarantor from any liability and is no longer liable. A loan will not be legally binding without the signatures of the borrower and the lender. For additional protection against both parties, it is strongly recommended that two witnesses sign and be present at the time of signing. Family Loan Agreement – To borrow from one family member to another. Depending on the creditworthiness, the lender may ask if collateral is required to approve the loan. Debt Relief – After the full payment of a note, this document must be issued as proof that the borrower has repaid his debts. .