A simple loan contract describes the amount borrowed, whether interest is due and what should happen if the money is not repaid. A loan agreement is a legal contract between a lender and a borrower that defines the terms of a loan. A credit contract model allows lenders and borrowers to agree on the amount of the loan, interest and repayment plan. Relying only on a verbal promise is often a recipe for a person who gets the short end of the stick. If the repayment terms are complicated, a written agreement allows both parties to clearly define all the terms of payment and the exact amount of interest due. If a party does not respect its side of the agreement, the written agreement has the added benefit that both parties understand the consequences. In the event of a subsequent disagreement, a simple agreement will serve as evidence to a neutral third party, such as a judge, who can help enforce the treaty. ☐ The loan is guaranteed by guarantees. The borrower agrees that the loan will be printed for each creditor and debtor until the loan has been fully repaid by – After being completed, the document must be printed for each creditor and debtor. The parties must carefully review the document and sign it. If the document is notarized, the parties must personally go to a notary with competent proof of identity and recognize the loan agreement. If the document contains a statement under oath of good faith, the parties must sign the same thing before the notary.
Certain conditions in the loan that can be taken out are: If the loan is secured, as described above, the document also contains a declaration of good faith, which the parties must also sign in the presence of a notary, and recognition and certification of the oath for the notary. For more information, check out our article on the differences between the three most common credit forms and choose what`s right for you. The loan agreement should clearly state how the money is repaid and what happens when the borrower is unable to repay.