What is a sample loan agreement?


Quick Answer

A sample loan agreement is a document that outlines the details of a contract between a person needing to borrow money and the person lending it. The parties involved decide the terms of the loan and then sign the contract once they reach an agreement. Having a loan agreement ensures that everyone involved understands how much money is being loaned and how it is expected to be paid back.

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Full Answer

A loan agreement includes any interest charged for the loan and how the interest is calculated. It also details how and when payments are made and the amount of each payment. A repayment schedule attached to the signed document ensures that all parties understand what is expected. Penalties for late payments should include the amount, how the penalties are added to the principal, and whether interest is charged on them. It is common to have the remaining balance become due if there are missed payments. Finally, list what happens to the contract if one party dies.

It is best to then have the completed document signed in front of a notary public or to at least have two people witness the signatures. This type of contract is also referred to as a promissory note.

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