A loan agreement is an important document that contains the terms of a deal wherein money has been transferred to an individual or some company, business firm or industrial sector by a bank or financial organization authorized under the government of the United States of America. This type of an agreement necessarily involves financial transactions and should thus contain all required details and be presented accurately. Authenticity is a prime factor that needs to be maintained in all loan agreements since these are legal and a single mistake may bring upon massive losses and cause damage to any or both the parties, leading to legal repercussions as well.
A loan agreement should always be a written document since a verbal assurance or even a deal as such can never be strong enough to serve as future references. The agreement document for a loan should contain the individual’s personal information details or the name and other identification details in case it is a company or business. There can be several types of loan agreement, some of which include:
- Housing Loan Agreement
- Employee Loan Agreement
- Student Loan Agreement
- Business Loan Agreement
- Trade Loan Agreement
- Industry Loan Agreement
- Land Loan Agreement
A loan agreement is generally prepared to record all important transaction details and the aspects inherent to the particular loan; hence, it should be prepared such that all the required particulars are contained in clear and understandable terms. Some points that form an essential part of a loan agreement are:
- Serial number of the loan agreement
- Date of commencement and closure of loan term and the entire validity period should be given.
- The financial organization’s details should be mentioned so as to prove its legitimacy, if required, at a later instance.
- A complete record of the individual’s personal details or the company or business house’s information details should be provided such that it does not become difficult to track them even after the loan period is over.
- The current details of account balance and other bank statements of the individual or company should be presented in a detailed manner.
- The type and form of the loan being given and its detailed discussion from all related prospects is an integral part of the agreement.
- The loan agreement should also mention all terms and conditions to which the deal is subject, in clear and understandable terms. The obligations and corresponding penalties for disrespecting or disobeying the loan terms must be included in the agreement as well.
- The approval of the agreement by both parties should be represented with authentic signatures and date.
A loan agreement may vary for the different types of bank and financial sectors(1) in the United States of America, but the basic structure of the agreement remains intact.