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.Continue Reading
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
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A loan agreement should contain the loan terms, personal details of the borrower and lender, and a solution to ensure compensation for the loan in case the borrower fails to repay the loan, according to the Houston Chronicle. To ensure that the agreement does not result in negative consequences such as obligation to arbitration clauses, it's best to seek the advice of an attorney before drafting the agreement.Full Answer >
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