Uploaded by: Christen Giles at March 10 2018 15:03:50.
A loan agreement doesn’t just prevent the lender from being “cheated”, it clarifies the terms of the loan and protects both parties. You’ll notice several things when browsing a sample loan agreement. A free loan agreement template clearly defines all parts of the loan so there are no misunderstandings later on.
Loan agreement can be used to record the terms and conditions of a loan made between individual persons or companies. Whether the loan is between friends and family or is a commercial loan between two businesses for a specific purpose, options in this Loan Agreement will allow you to make a simple interest-free loan or add and automatically calculate interest, set a repayment schedule, add guarantors and require the borrowers to provide security for the loan.
The family loan agreement is a template that allows two (2) family members construct a legal contract for the lending of money to a borrower in exchange for being paid back at a later time with interest. Considering the person that is borrowing the money is family, the loan is unsecured which means there are no assets behind the paper agreement. If the borrower does not repay the debt, the lender’s only route to get their money back will be to go through legal action or small claims court.
A loan agreement template can include the payment terms the lender wants to have as a provision in the document. There are four repayment provisions the borrower can offer to a lender. There may be more than one repayment provision in the loan agreement template. The repayment plans include: (1). End of term lump sum repayment: The lender requires the borrower to repay the loan until a set end date for the note term. When the end date arrives, the borrower pays the remaining balance as a lump sum. (2)Interest only: The lender requires the borrower to make payments via increments as set forth in the loan contract agreement. The payments do not go toward the principle of the loan. Once the borrower pays off the interest, the individual must pay off the principle as a lump sum payment. (3). Principle and interest repayment method: The lender requires the borrow to repay the loan in a set number of days, weeks, months, or years. The initial payments pay off the compounded interest on the loan first. Once the interest is paid, the borrower’s payments apply to the principle of the loan. The payments continue until the entire principle is paid in full. (4). Specified periodic increments: The lender requires the borrower to repay the loan in intervals the parties agree to in the loan agreement template.
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