A loan agreement is a legally binding document that outlines the terms and conditions of a loan between a borrower and a lender. This document serves as evidence of the loan agreement and provides protection for both parties in case of default or any other dispute. If you are in the process of borrowing or lending money, it is important to have a written loan agreement in place to ensure a smooth and hassle-free transaction. Here is a sample of a letter of loan agreement to help you create one.
[Date]
[Name of Borrower]
[Address of Borrower]
[City, State ZIP Code]
Dear [Name of Borrower],
This agreement, made and entered into on [Date], by and between [Name of Lender], with an address at [Address of Lender], hereinafter referred to as the “Lender,” and [Name of Borrower], with an address at [Address of Borrower], hereinafter referred to as the “Borrower,” sets forth the terms and conditions of a loan made by the Lender to the Borrower.
Loan Amount:
The Lender agrees to lend to the Borrower the amount of [Loan Amount] to be used for [Purpose of Loan]. The loan shall be repaid in full on or before [Date of Repayment], with the total amount due being [Total Loan Amount].
Interest Rate:
The loan shall accrue interest at a rate of [Interest Rate] per annum, calculated on the outstanding balance of the loan from time to time. Interest shall be due and payable on the same dates as the principal.
Repayment Schedule:
The Borrower shall make repayments in the amount of [Repayment Amount] on a [Frequency of Repayment] basis. The first repayment shall be due on [First Repayment Date] and shall continue until the loan is repaid in full.
Late Payments:
If the Borrower fails to make a repayment within [Number of Days] days of the due date, the Borrower shall be charged a late fee of [Late Fee Amount].
Default:
In the event of default by the Borrower, the Lender shall have the right to demand full repayment of the loan, together with any accrued interest and late fees, and to pursue any other legal remedies available to the Lender.
Governing Law:
This agreement shall be governed by and construed in accordance with the laws of [State], and any action arising out of or in connection with this agreement shall be brought in the courts of [State].
Entire Agreement:
This agreement constitutes the entire understanding between the Lender and the Borrower and supersedes all prior negotiations, understandings, and agreements.
If you agree to the terms and conditions of this loan agreement, please sign and return a copy of this letter to the Lender.
Sincerely,
[Name of Lender]
[Signature of Lender]
I have reviewed and agree to the terms and conditions of this loan agreement.
_________________________
[Name of Borrower]
[Signature of Borrower]
In conclusion, a loan agreement is an essential document that protects both the borrower and the lender. It outlines the terms and conditions of the loan and should be signed by both parties to ensure that they understand and agree to the terms of the loan. Use this sample letter of loan agreement as a guide to help you create your own.