A loan agreement is a contract between a borrower and a seller that documents the terms and conditions of a loan.
- Loaning money to a person or business
- Borrowing money from a person or business
At some point in time in our lives, nearly all of us will find ourselves in need of a financial loan. Whether buying a home, a car, or covering unanticipated expenses, getting a loan can be a helpful way to bridge a financial gap.
An agreement to loan or borrow money spells out the terms and conditions that the parties have agreed to regarding the transaction. Loans are available through a myriad of commercial lenders, but many of us accept loans from parents, friends, or family to cover expenses like college tuition, our first home purchase, or buying a new car. Regardless of whether you are taking a loan out from a bank or a friend, the loan transaction should be supported by legal documentation. This is an important way to avoid confusion and make sure that all parties are on the same page from the very beginning. Additionally, if things go wrong and the parties to the loan agreement end up in court, having a legal document proving your rights under the agreement will prove very useful. Loan agreements should include certain key details. The contract should show the amount of the loan, the repayment conditions, any collateral or security used for the loan, any applicable fees or penalties, and whether the loan is transferable to other parties. If the lender requires a co-signor, the loan agreement should also include a provision explaining relevant rights and liabilities and have a place for an additional person to sign. Use this interactive form to create a loan agreement that is suitable for all of your needs.