A security agreement is primarily a mutual document between the loan lender and the borrower. A financial loan backed up by a security is called as the secured loan. As per the security agreement, if the borrower cannot repay the loan amount within the predetermined time period, the lender can sell the security interest or the collateral to get the value equal to the pending debt. The agreement papers are used to ensure that both the lender and borrower are compatible with the terms and conditions regarding the loan issue and the repayment options.
The security agreement include various essential information’s such as the details of the object which is being used as a security amount, details of the proof of ownership of the borrower on the asset which is being used as the collateral, the time period set for the full repayment of the loan amount and the interest rates applicable to the loans etc.
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