A personal loan agreement is a legal or written contract document that is signed by the both lender and borrower. This document indicates the terms and conditions that both parties have agreed upon. In addition, as its name implies, it is the agreement usually between relatives and friends. With the help of a personal loan agreement template, you can write this agreement in a more organized way.
This type of loan is not secured but by writing an agreement you can formalize the loan. Moreover, this agreement protects both parties from future disagreements as it is legally binding. You may also like the Loan Agreement Template.
Table of Contents
Key contents of personal loan agreement:
The personal loan agreement has the following key contents;
Borrower and lender details:
It includes personal information of both the lender and borrower such as their full name, address, contact information, Email Address.
Here you have to mention the date that when the loan was borrowed. Also, mention the agreed date of the loan payment. These dates show the valid contract duration.
In this section, state the total amount of the loan that the lender has given to the borrower. Moreover, mention the payable amount that borrower will return to the lender.
Next, write down the agreed interest rate. If there isn’t any interest rate then also indicate it.
Mode of payment:
In this part, you have to indicate the mode of repayment. Here you can discuss the terms and conditions governing the loan repayment. If the mode of repayment is monthly then write down the amount of each installment. In addition, indicate the method of payment such as cash, cheque, etc.
Agreement Violation results:
This includes the results of late payment or any violation by the borrower.
If you have included any guarantor then provide his personal information such as his full name, contact information, and Email Address.
In the end, affix the signatures of both lender and the borrower.
At the end of the document, the lender or borrower can also include any additional information that they want to include in the agreement. You may also see the car lease agreement template.
How the personal loan agreement is different from a standard loan agreement?
A standard loan agreement states some specific conditions for which the loan will be used and it is mandatory to follow them. For example, if you take a loan for buying a home then you can’t use it for buying a car.
On the other hand, a personal agreement doesn’t specify where to use the money of personal loan you can use it for any purpose. The borrower identifies how to use the entire loan.
For obtaining a standard loan you have to produce collateral that serves as security to pay the loan if the borrower fails to pay the loan amount at a specific time. While a personal loan doesn’t need any loan security. That’s why it is an unsecured loan. You should also check Personal Financial Statement Template.
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In conclusion, a personal loan agreement is a useful document that states the terms and conditions both parties have agreed upon. You can also download personal loan agreement templates from any website and customize them according to your need.