Download these 9 Free Sample Loan Agreement Templates to assist you in preparing your own Loan Agreement.

When you borrow money from your cousin or a friend for personal use is completely different when you need money for your business and you get a loan from a company or bank. In order to make sure that both the borrower and lender understand each other’s rights and obligations, they sign a contract. This contract is known as the Loan Agreement. When this agreement is effective, the borrower has to return the money on the agreed terms and conditions. The lender can’t force anything new on the borrower. Both parties are obligated to respect and follow the guidelines included in the agreement until all the money is returned to the lender.

Types of Loan Agreements:

There are practically dozens of types of loans that people can get from loan companies and banks but most of these types depend on the use of the loan. For example, a student will ask and get a student loan for his studies where a business owner will get loan for new investment in his company. In the same manner, there are auto loans that only work when you are about to buy a vehicle i.e. a family car and then there is mortgage loan which is the most common type of loan. Mortgage loan is where the borrower will pledge a piece of his property with the lender and this will work like an insurance for the safe return of the loan.

Professional tips for Loan Agreements:

Starting with the most obvious thing, the Loan Agreement should include the basic terms about why the borrower is getting loan from the individual or a company and for how long he is planning to keep the money. This also includes the time period in which the borrower will return the money back to the lender along with the details of payments or installments i.e. weekly or monthly.
Another important part of a Loan Agreement is that what will happen if either party violates the terms or if the agreement is breached. This can happen very often and you can also breach the agreement unintentionally so you better have the knowledge of all the outcomes in case of any potential breach. This is more important from the perspective that the other party has violated the agreement and you have to consider all of your options and legal rights to include legal authorities in the matter.
While we are discussing the violation of Loan Agreement, it is also important to include the mediation process in the agreement. This will come handy if either party breaches the contract and the other party wants to take legal steps against him. With the mediation information included in the agreement, you will have a better option to resolve the matter either by filing a case in the court or including a third party or professional mediator of your choice as agreed in the contract.
If this is a mortgage loan, the borrower will pledge some property or his belongings with the lender i.e. jewelry or a car so the Loan Agreement should include the terms about the rights of borrower on his property and what will happen to the property if the borrower fails to return the loan in time.