Loan Agreement Template Design
Loan agreement is a binding agreement describing where a loan will be repaid or extended. So, if you loan money to family, friend, or other parties, you may need to create a loan agreement template. This will help each party knows about the terms of repayment & what happens if the payment is late.
How to Write a Loan Agreement Template
There are some steps that you have to follow in writing a loan agreement form. You can start with the document title. After you open Ms. Word, you can write “Loan Agreement” at the top of the page. As the title, it will be better if you bold the fonts.
After that, you have to identify both parties about the loan agreement. You have to make sure that you include the addresses of both borrower and lender. For example, you can write in the form “This loan agreement between Mr. Smith (borrower) on Cranbrook Road and Mrs. Jane (lender) on Gluch Avenue.
Do not forget to add the date of the loan agreement. It is very important if a legal dispute arises. For example, you can write on the document “The agreement is reached on 15th of May, 2018”. Make sure that you write the right date completely including the month and year.
Now, you need to state the amount of the money borrowed. It depends on the loan agreement reached. If the borrower loan 5,000 dollars, you can write “The borrower loans from the lender up to the sum of US $ 5,000”. You can also be more detailed in stating the amount of money.
Then, the interest should also be stated clearly. The interest may be calculated by week, by month, or by year. For example, you can write on the loan agreement “The interest will be assessed from the loan start on the unpaid principal at 6% rate per annum.
Next, you also have to include the schedule of repayment. It should be clear how often the payments are made. Besides that, it also relates to when 1st payment is due. When the last payment is due should also be stated clearly.
The clause on a late fee should be inserted, too. Because you have made the schedule of repayment, it should be clear about the charge that must be paid by the borrower if he or she is late to pay the loan. It depends on the agreement. For example, the late charge can be $ 25 for each late payment.
It is also important to include the clause of prepayment. You have to state it clearly what if the borrower pay the entire loan before its due date. Whether there will be a penalty or not, it should be stated clearly, too.
Last, loan agreement template should also include the default provisions. It relates to many situations. For example, it should be clear what if the borrower lost the job, get an accident, etc. If all the agreements are made in detailed, it can minimize any problem in the future.