Uploaded by: Victoria Person at March 11 2018 04:38:24.
A 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, but they all follow a similar pattern. This agreement will protect both parties during their financial transaction, whether it is related to real estate, businesses, or other finances.
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.
The legal issues surrounding the taking of security are complex, and there are various legal forms that can be used, for example, a chattel mortgage (a mortgage over tangible and moveable property, such as plant and machinery or vehicles), fixed and floating charge, pledge, lien and assignment by way of security. Security over shares is different again, and can be achieved by way of a legal mortgage, an equitable mortgage or an equitable charge.
It is the lender’s responsibility to determine the credit worthiness of the borrower. The borrower’s trustworthiness can be evaluated through credit reports and references. The borrower might also consider things like the length of time the borrower has lived somewhere or the amount of time at a job. The lender should read over the loan agreement draft to see if all the provisions and writings are accurate. The lender’s signature will convey that the document is read, understood, and accurate.
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