Q:

How do I write a loan agreement?

A:

Quick Answer

A loan agreement should be written to include contact information of all parties involved, the amount borrowed, repayment terms, interest rates, security provisions and a cancellation policy, states Chron. There are loan agreement templates available online for individuals to download as well as attorneys who can offer professional legal advice.

 Know More

Full Answer

It's a good idea to enlist the services of an experienced attorney while drafting a loan agreement in order to learn more about the most current laws regarding loans, notes Chron. An attorney can also enlighten an individual on the benefits and disadvantages of the agreement as well as how much it costs to draw up the loan.

It's best that an individual not include arbitration clauses or liability releases in the agreement, since doing so can prevent an individual from fully exercising the obligations and rights listed in the agreement. For instance, an arbitration clause might prevent the lender from taking legal action in the event that the borrower violates the terms of the loan agreement.

An alternative to a loan agreement is a promissory note, which is only signed by the borrower. A lender might find it easier to enforce the stipulations in a promissory note since they are written in direct terms and contain easy loan default solutions.

Learn more about Credit & Lending

Related Questions

  • Q:

    How does a mortgage work?

    A:

    With a mortgage, a lender issues money to a buyer for a home purchase in exchange for a guarantee of repayment of principal and interest, according to Bankrate. The loan is issued upfront and the borrower repays it with monthly payments for a stated period of time.

    Full Answer >
    Filed Under:
  • Q:

    How do you pay back student loans?

    A:

    To pay back a student loan, an individual needs to make payments through his loan servicer, choose a repayment plan and possibly consider consolidating his loans. If a student becomes disabled, or if his school closes, he may no longer be obligated to repay his loan.

    Full Answer >
    Filed Under:
  • Q:

    How can you get car payment assistance?

    A:

    Get car payment assistance using assistance programs, repayment plans and loan extensions. The first thing to do if you can't complete car payment is to contact your lender. Many people tend to avoid their lenders, but this choice often only makes the situation more difficult for them.

    Full Answer >
    Filed Under:
  • Q:

    What is the range of interest rates offered by payday lenders?

    A:

    A payday loan with a 2-week repayment structure has an average interest rate between 391 and 521 percent, according to the Center for Responsible Lending. Payday loans often lead to further financial distress because after paying the interest on the 2-week loan there is no money to pay other obligations.

    Full Answer >
    Filed Under:

Explore