Components Of loan Agreement A loan agreement is a contract in the form of document that consists of details of loan. Loan contract template includes contract between lender and debtor that consists of terms and conditions that administer the annex and settlement of the loan. There exist specific laws and regulations that lenders follow which is applicable to individuals and organizations. Both the lender and debtor have to agree on the terms as mentioned in the loan agreement and follow the clauses as mentioned for the duration of loan. The standards of loan agreement are up to government laws or local laws. This is an advantage for debtor as well as lender. In case of lender the benefit lies in case debtor fails to pay loan at agreed times. In case of debtor can seek legal rights offered.
There are various other points considered while defining loan agreement. To avoid fraud, contact information of both lender and debtor is included in the agreement. The rate of interest applicable is mentioned. Along with that in case of any fees applied, that is also mentioned. Penalties involved in case of failure to pay loan returns on time are mentioned.
Repayment terms are also included. The rights and responsibilities of both lender and debtor are mentioned. In case of personal loans involving two individuals the rules might not be as stringent as in case of bank an individual. There do exist templates online that can be referred to draft personal Loan Contract Template by placing mutually agreed clauses.
There are some terms what we can call as loan associated terms that you should be aware of. Principal It is the actual amount of the loan that is owed by the Debtor to the lender. Once the Borrower starts Paying the loan back, the principal refers to the pending amount at that instance of time. Interest It is the amount charged by Lender to a Borrower for borrowing money. It is the percentage of borrowed amount. The rate of interest is annual interest rate. Compounded
It refers to frequency of interest calculation and its addition to the principal amount.
There also exist online mortgage calculators which can help you check the EMI applicable considering your monthly take away salary. But you need to personally think about whether you can afford to pay the loan in case you apply for one. Get overview of monthly expenses, how much you invest and how much you can pay off as EMI.So off you go!! Get your calculators and start working!!
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