Today it is difficult to find a person who has never taken a loan from a bank. And just as it is difficult to find a borrower who would have read a loan agreement at least once before completing a loan.
And this sometimes makes life easier and eliminates all sorts of problems. So what to look for when concluding a loan agreement? What should be indicated in the contract and what not?
General information about the loan agreement
Most often, borrowers who decide to apply for a loan at a bank do not have a legal education, respectively, and cannot evaluate the agreement in terms of the correctness of its execution, in accordance with current legislation. And, of course, even if they could, then even a learned borrower always fails laziness.
In other words, we are just too lazy to read the contract, which is written in small letters, and even on 10 sheets. It is easier to sign and not ask questions. But let’s deal with the very concept of the contract and find out what should be indicated there and what should not.
So, a loan agreement is a special type of agreement between an individual and a legal entity (or between two legal entities), implying the provision of credit property or a loan amount from one person to another. A loan agreement is concluded between two participants in a financial transaction, hereinafter referred to as the lender and the borrower.
Under the current agreement, the lender undertakes to issue a cash loan to the borrower, and the borrower undertakes to repay the amount received on loan, taking into account a certain time and payment of interest for the provision of a loan.
The loan agreement is concluded in writing in duplicate
And is signed by both parties to the agreement. In this case, one copy is given to the client, and the second remains in the credit institution. The contract is considered concluded from the moment of its signing and is considered to be completed from the moment of making the last payment by the borrower on the loan. The contract may be amended or extended in the presence of two parties, between which it was concluded.
Changes must be made with the consent of both parties. By changes is meant a revision of the loan repayment schedule, for example, in the case of refinancing a loan, or when restructuring a loan. Also, the contract may be amended if the credited person, due to circumstances, cannot repay the loan in a timely manner, and claims to provide credit holidays.
A loan agreement can be extended if the payment schedule is revised and a decision is made by both parties to extend the loan term under the current program (in this case, the maximum loan term is taken into account). For example, if the maximum loan term is 10 years, and the loan was taken for 5, then it can be extended for another 5 years.
What is indicated in the loan agreement?
In a loan agreement, as a rule, the conditions of the loan agreement are described, the rules for concluding an agreement are described. In addition, it indicates the following data:
- Subject of the agreement (loan issuance);
- The procedure for concluding a contract (terms of the contract, loan amount, conditions);
- Obligations of the parties (lender and borrower);
- Responsibility of the parties (the creditor is responsible to the borrower, and the credited person to the creditor);
- Rights of the parties (bank and borrower);
- Borrower rights;
- Amendment of the agreement;
- Other conditions;
- The term of the contract and the terms of its early repayment (the term of the loan agreement is indicated taking into account the date of its execution);
- Description of the subject of pledge (if the loan involves the provision of collateral).
What to look for in a loan agreement?
Suppose that our client did not read the loan agreement and issued a loan. Let’s see what he should pay attention to anyway? Firstly, in most loan agreements, a period is indicated that painlessly (without fines, penalties, etc.) allows the client to refuse the loan amount or the goods provided to him on credit. On average, a failure period is 10-14 days.