A personal loan agreement letter is charted out for the purpose of laying down loan terms and conditions between a borrower and a lender. It includes information of both the borrower and lender along with specifications of how a loan is being offered and what terms it will be paid back on.
Personal loans are usually given to clients by banks to fulfil a financial need. Personal loans can also be managed between friends and family members but the best way to go about obtaining / giving any type of personal loan is to draw an agreement between both parties.
Loan agreements are usually considered legally binding especially if they are drawn by attorneys. They must bear the signatures of both borrower and seller along with a witness. Some of the common things that all personal loan agreements have are:
• Loan amount
• Interest rate
• Prepayment information
• Payment dates and amounts
• Waiver (if any)
When all this information is on hand, it is easy to write a personal loan agreement. Since the basic purpose of drawing a loan agreement is to formalize a loan, it is important to write it in a formal tone. Here is a sample personal loan agreement letter that can help you write one of your own:
Monday, January 12, 2014
Personal Loan Agreement
This agreement is made at Bank of America (Lender), Main Office, situated at 88 Bing Road, Topeka, KS, this 10th day of January 2015 between Mr. Jacob Swift (Borrower) residing at 55 Mathews Road, Topeka, KS.
Whereas the borrower has applied for a loan amounting to $7000 (seven thousand dollars) for the purpose of home renovation.
And whereas the lender has agreed to advance such loan based on terms set forth in this personal loan agreement letter.
BORROWER AGREES AND COVENANTS WITH LENDER AS FOLLOWS:
• The said advance will be governed by the terms and conditions contained herein and the ones embodied in the loans sanction letter
• The borrower agrees that the advance amount will be used only for the purpose stated in the original loan application
• The loan will be disbursed to the borrower in one installment and credited to the bank account that he /she has specified in the original loan application
• The borrower agrees to pay the loan amount in 24 equal monthly installments of $320.80 on the 5th day of every month
• Rate of interest on the entire borrowed amount is set at 10% for now and is liable to change at the discretion of the lender
Bank of America (Lender) Stamp and Seal Jacob Swift (Borrower)