Free Loan Agreement

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Loan Agreement

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LOAN AGREEMENT

THIS LOAN AGREEMENT (this "Agreement") dated this ________ day of ________________, ________

BETWEEN:


__________ of ______________________________________
(the "Lender")

OF THE FIRST PART

AND


__________ of ______________________________________
(the "Borrower")

OF THE SECOND PART

IN CONSIDERATION OF the Lender loaning certain monies (the "Loan") to the Borrower, and the Borrower repaying the Loan to the Lender, both parties agree to keep, perform and fulfill the promises and conditions set out in this Agreement:

  1. Loan Amount & Interest
  2. The Lender promises to loan $____________________USD to the Borrower and the Borrower promises to repay this principal amount to the Lender, without interest payable on the unpaid principal, beginning on October 31, 2020.
  3. Payment
  4. This Loan will be repaid in full on October 31st, 2020.
  5. Default
  6. Notwithstanding anything to the contrary in this Agreement, if the Borrower defaults in the performance of any obligation under this Agreement, then the Lender may declare the principal amount owing and interest due under this Agreement at that time to be immediately due and payable.
  7. Governing Law
  8. This Agreement will be construed in accordance with and governed by the laws of the Commonwealth of Virginia.
  9. Costs
  10. All costs, expenses and expenditures including, without limitation, the complete legal costs incurred by enforcing this Agreement as a result of any default by the Borrower, will be added to the principal then outstanding and will immediately be paid by the Borrower.
  11. Binding Effect
  12. This Agreement will pass to the benefit of and be binding upon the respective heirs, executors, administrators, successors and permitted assigns of the Borrower and Lender. The Borrower waives presentment for payment, notice of non-payment, protest, and notice of protest.
  13. Amendments
  14. This Agreement may only be amended or modified by a written instrument executed by both the Borrower and the Lender.
  15. Severability
  16. The clauses and paragraphs contained in this Agreement are intended to be read and construed independently of each other. If any term, covenant, condition or provision of this Agreement is held by a court of competent jurisdiction to be invalid, void or unenforceable, it is the parties' intent that such provision be reduced in scope by the court only to the extent deemed necessary by that court to render the provision reasonable and enforceable and the remainder of the provisions of this Agreement will in no way be affected, impaired or invalidated as a result.
  17. General Provisions
  18. Headings are inserted for the convenience of the parties only and are not to be considered when interpreting this Agreement. Words in the singular mean and include the plural and vice versa. Words in the masculine mean and include the feminine and vice versa.
  19. Entire Agreement
  20. This Agreement constitutes the entire agreement between the parties and there are no further items or provisions, either oral or otherwise.

IN WITNESS WHEREOF, the parties have duly affixed their signatures under hand and seal on this ________ day of ________________, ________

SIGNED, SEALED, AND DELIVERED
this ________ day of ________________, ________.

   


_____________________________
__________

     


SIGNED, SEALED, AND DELIVERED
this ________ day of ________________, ________.

   


_____________________________
__________

     

Loan Agreement Information

A Loan Agreement is also known as a:

  • Term Loan
  • Note Payable

What is a Loan Agreement?

A Loan Agreement is a document between a borrower and lender that details a loan repayment schedule.

Use LawDepot's Loan Agreement template for business transactions, student tuition, real estate purchases, down payments, or personal loans between friends and family.

Why should I use a Loan Agreement?

Using a Loan Agreement protects you as a lender because it legally enforces the borrower's pledge to repay the loan in regular payments or lump sums. A borrower may also find a loan contract useful because it spells out the details of the loan for their records and helps keep track of payments.

What can you use a Loan Agreement for?

Customize LawDepot’s Loan Agreement template to suit a variety of purposes, including:

  • Business loans, such as capital for a startup business
  • Purchases, such as a vehicle, boat, or furniture
  • Real estate loans, such as a down payment on a home
  • Student loans for tuition and other educational expenses
  • Personal lending between friends or family for debts or bills

What is the difference between a Loan Agreement and Promissory Note?

A Loan Agreement is more comprehensive than a Promissory Note and includes clauses about the entire agreement, additional expenses, and the process for amendments (i.e., how to change the terms of the agreement). Use a Loan Agreement for loans of a large amount or that come from multiple lenders. Use a Promissory Note for loans that come from non-traditional money lenders like individuals or companies instead of banks or credit unions.

What does a Loan Agreement include?

Loan agreements generally include information about:

  • The location. People usually choose the lender's location for the Loan Agreement, but if the agreement is for the purchase of assets, then the parties might choose to list the location of the assets instead.
  • The lender and borrower. These details include name, address, and whether the lender or borrower is an individual or a corporation. You may also add a co-signer who agrees to pay the debt if the borrower defaults on the loan.
  • The loan amount. The amount of money being lent to the borrower is the loan amount.
  • Interest and late fees. If the lender charges interest, they may specify the percentage of interest and how often it’s compounded (monthly, every six months, or yearly). The lender may also penalize overdue payments by charging late fees or increasing the interest rate.
  • Repayment method. The borrower may repay the loan in a single payment or regular payments. The agreement should outline the repayment schedule, when the final amount is due, and if the borrower can repay the loan early or in lump sums.
  • Collateral and insurance. The borrower may secure the loan with collateral such as a vehicle, equipment, or jewelry. In this case, the lender may seize the collateral if the borrower cannot repay the full loan amount. The lender may also require the borrower to obtain insurance if using the loan to buy a vehicle.

Should I charge interest in the Loan Agreement?

Interest is a way for the lender to charge money on the loan and compensate for the risk involved with the transaction.

You may choose to begin charging interest or increase the interest rate if the borrower fails to make a payment on time. The increased interest provides you with additional compensation for the borrower's failure to pay as promised and the trouble of having to enforce the Loan Agreement.

What happens if the borrower or lender dies before repaying the loan?

If the borrower dies before paying off the loan, authorities will use their assets to pay the remainder of the debt. If there is a co-signer, the responsibility for the debt falls to them.

If the lender dies before receiving the complete repayment, the borrower owes to the lender’s estate. In this case, the beneficiaries of the lender’s estate will collect the remainder of the debt.

If the loan is for a significant amount, it’s important that you update your Last Will to specify how you want to deal with the outstanding loan upon your death.

Related Documents:

  • Promissory Note: similar to the Loan Agreement, but commonly used for more straightforward loans or IOUs
  • Bill of Sale: a sales slip documenting the sale of an item between two parties
  • Sales Agreement: a contract outlining a future transaction between a seller and buyer
  • Invoice Form: a written statement verifying the purchase of goods or services
  • Purchase of Business Agreement: a contract that transfers the ownership of a business from a seller to a buyer
  • Real Estate Purchase Agreement: a contract that outlines the terms of a residential property deal between a buyer and seller

Frequently Asked Questions:

Loan Agreement FAQ
Sample of LawDepot’s Loan Agreement template

Sample

Loan Agreement

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