The Main Components of a Loan Agreement
A Loan Agreement refers to a contract that is signed between a lender and a borrower, mentioning all the loan granting terms and conditions to the borrower. It is possible to take a loan from a family member, friends or a lending institution. Regardless of who it is given to, a loan agreement is an important piece of document. This is because it is legally binding, and can help settle any dispute that might later arise between the lender and the borrower. Find out about the important things that a loan agreement template in California should contain.
Loan Amount
It should mention clearly how much loan is granted to the borrower, also referred to as the Principal Amount. The contract also defines the duration or the span of time the loan is being given for.
Prepayment Clause
This refers to the early loan payment or the payment prior to the due date that is expected. Loan prepayment is typically allowed upon prepayment of the charges for penalty. In order to safeguard a lender against the interest payments loss, this type of penalty is actually levied. You can find this clause being included in most of the free loan agreement template in California forms that can be downloaded online.
Interest Clause
This means the interest rate that the borrower has to pay, along with the principal amount. This also mentions the extra charges or the penal interest that has to be paid in case of principal or even interest payment default.
Repayment Clause
In a loan agreement template in Florida, this is a huge component. Such a clause mentions when and how the borrower would pay the loan back to the lender. He can repay the amount periodically or at one time, in a lump sum. If the payments are periodical, the contract must mention how many loan installments have to be paid and on which date these would be due.
Loan security
A loan may be unsecured or even secured. If it is a secured loan, it is typically a car, home or any other asset that is used as the loan collateral. If there is a default of payment, the loan amount can be recovered with the help of the pledged security.
Author Resource:-
Carl writes often about legal drafting of rental & commercial lease agreements, loan agreement and bill of sale to help the people in needs. For more information about getting a loan agreement template in Florida, please visit this website.
