Loan Agreement: Important Terms to Include

A loan agreement is a binding contract between the involved parties to ensure a smooth loan process. People still get loans to complete their education, buy a new house, purchase a car, and so on. Loans are almost a necessity of life, but it’s necessary to draft a thorough loan agreement for fast and easy loan repayment.

Since every loan is different; therefore, the conditions in each loan agreement are different as well. There is no one rule through which you can draft a loan agreement, so the best thing is to ask for legal advice on the matter.

Why Do You Need a Loan Agreement?

The main reason why people need a loan agreement is to make each party’s role clear in the role process. The loan agreement gives a brief detail about their responsibilities as well. The agreement must be prepared according to the rules and regulations to protect the rights of both lender and borrower. All types of loans are the same in the eyes of the law, so all of them are treated equally. The loan agreement is signed by both parties to ensure that the loan money is used for a specific purpose. In case it’s not used for that purpose, then the borrower is required to return the loan immediately.

Important Terms in Loan Agreement

A loan agreement includes specific terms in it that every person must know about. Here are common terms used in a loan agreement.

Choice of Law: This term is used to highlight the difference between the laws in different jurisdictions. The agreement is prepared according to the laws of the specific jurisdiction.

Entire Agreement Clause: It refers to the final agreement after the previous negotiations. Once it’s finalized, the previous agreement (if any) is no longer applicable.

Involved Parties: It refers to the personal information of both lender and borrower, such as social security number, phone number, address, names, etc., in the agreement.

Severability Clause: This term means that the contract terms are independent of one another.

So, wondering how contract disputes can be avoided? Simply by getting a loan agreement!

In case you’re in search of a lawyer to help you with drafting a loan agreement, then you’re in the right place. It’s best to get professional help rather than putting your whole agreement at risk. One single mistake can jeopardize your position, so contact us now at Wembley Solicitors to get more details on your case. We’re here to help you with your loan agreement!