Loan Agreement to Legalize Borrowing Things

When an individual borrows money or another thing, a document of the loan agreementis needed to be made. This document will be evidence of the loan and legalize the agreement. In common, it is applied by banks and companies. However, another institution could use it too.

This document will provide a detailed agreement between the borrower and the lender. Of course, the agreement is below the law. It means when a participant of an agreement breaks the detailed agreement, they will face the consequences.


What Does Loan Agreement Mean?

In simple, a loan agreement means a document that is made between the borrower and lender that details the repayment schedule. Besides, there are also some points of agreement that are dealt with by the two participants.

Inside this document some consequences that should be faced when a participant of an agreement breaks the deals. It could be said that the main purpose of a loan agreement is to secure the loan and its detailed schedule.

Why Should a Lender Use Loan Agreement?

For a lender, using a loan agreement is very essential. This document will protect the lender from any harmful matter that may happen. This document also will legally enforce the pledge of borrowers to repay the loan in a regular payment.

On another hand, the borrower also will have benefit from the loan agreement. Through this document, the borrower will know the detailed payments that they need to pay and the right time to repay. Of course, the schedule also will help them to prepare some money for the payment.

What Does the Loan Agreement Include?

These are some matters to be included inside the loan agreement. Of course, the detailed points will deliver clear information to be applied for both borrower and the lender.

Things to be included inside a loan agreement are:

  • The location of the agreement
  • The detailed information of the lender and the borrower
  • The amount of the loan
  • The interest and late fees if any
  • The method of repayment
  • The insurance and collateral

Sample of Loan Agreement

Dear Mr. James

After receiving and reviewing your application, we are glad to let you know that you have been approved to loan $4500 as your request. Thank you for the 10 years of personal business with our company and we hope the best of luck for you in the future.

Please review the terms of the agreement to let us know when you have a further question.

The Independent Financial, the lender, will provide a loan of $4500 to the Zero Company, the borrower. The borrower agrees to repay the loan per month from June 7, 2011, to July 7, 2011. The payment will be accepted by online transfer into account #51719991.

The loan will be sent to the borrower after this letter is signed. Then, the loan can be up for consideration six months after the date of this letter. To receive the loan, please sign the business account below.

Thank you for your attention and contribution.



That is all about the loan agreementthat you need to know. It will be better when you make this agreement with specific points.


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