Regardless of whether you want to borrow money from friends, family or use payday loans online, you will need to know what a loan agreement is. Is it legal? Does it contain all necessary elements? Will you be able to change it or opt out? Check what you need to know before signing with the lender!
In this article you will learn:
What is a loan agreement? In what form can we and should we conclude a loan agreement? What provisions govern loan agreements? What is a framework loan agreement? What elements should the loan agreement contain? How to write a money loan agreement? When is the loan agreement invalid? What changes are allowed in the loan agreement? How to prepare an annex to the loan agreement?
What is a loan agreement?
A loan agreement is an agreement whereby one party transfers to another the ownership of money or an item specified as to the species, and the other in return undertakes to pay the same amount or item as defined as after the expiry of the time specified in the agreement.
A money loan agreement is one of the most frequently concluded business transactions. At the same time, it is the simplest loan operation. You’ll meet her for sure if you want to take advantage of an online loan.
In what form can we and should we conclude a loan agreement?
The loan agreement is a consensual agreement. This means that only a consistent declaration of intent by both parties is needed to conclude it. This means that even an oral contract will be valid, as long as the desire to enter into an undertaking is presented in a sufficiently understandable way.
Exceptions are loan agreements for an amount exceeding one thousand dollars, which according to the law should always be in writing. In practice, however, loans with loan companies are only in writing.
This is a much safer solution, because the signed document is valuable evidence in the event of any disputes between the borrower and the lender. So it’s always better to seek a contract in writing.
What provisions govern loan agreements?
Are you wondering where the loan agreement is regulated? The Civil Code, or the Civil Code, is a place where you should look for the relevant provisions. You can find them exactly in art. 720 KC. However, there are also a number of other provisions that specify the regulations regarding loans .
What is a framework loan agreement?
Many people wonder: “What is a framework loan agreement”? It is a document that the loan company sends to the client interested in the offer. It sets out the rules on which the loan will be granted. It mainly includes:
- detailed loan terms,
- dates of loan granting and repayment,
- procedures for dealing with situations where deadlines are not met.
This is a document that you should read very carefully before signing. It may happen that there are errors or very bad records for you.
What elements should the loan agreement contain?
A well-drawn loan agreement should contain a number of elements. Which of them are definitely necessary?
- Place and date of the contract
- Parties to the contract together with relevant data for their recognition
If the contracting party is a natural person, you must provide your name, address, ID card or passport number. However, in the case of a legal person, the full name of the company, address of its registered office and NIP, KRS and REGON numbers should be provided.
- Subject of the contract
The contract must clearly indicate the subject of the loan. If it is money, the amount should be provided both digitally and in words, and the currency should be specified. The repayment period is also specified here.
- Conditions for the return of the undertaking
This part of the contract contains a provision on how the refund will be made. It can be a cash form or a bank transfer. An additional provision is usually clauses, specifying whether repayment will take place in installments or once, as well as which commissions and interest rates it entails.
- Declaration of the borrower’s assets
This is an element that appears in collateral loans. It specifies the form of securing the contract. Most often it is a promissory note, pledge of real estate or transfer of ownership as security.
- Terms of withdrawal
Here, you specify the conditions that each party must meet if they want to withdraw from the contract.
- Website signatures
They confirm that the parties agree to the terms of the contract.
How to write a money loan agreement?
If you conclude a loan agreement with a non-bank company, you will definitely get a framework agreement to sign. You can negotiate its terms, but you don’t have to write it down from scratch.
The situation is different if you conclude a contract with an individual. Then it is best to use ready-made designs available on the web. However, make sure that the contract includes all of the elements listed above.
When is the loan agreement invalid?
There are situations when the loan agreement is not valid. This happens when the provisions of the concluded contract are inconsistent with the generally applicable law. For example, it may be inconsistency with the provisions of the Anti-usury Act.
Such situations, however, occur very rarely, because loan companies care about the correctness of documents. However, if you have doubts about the compliance of any of the records, you should consult a lawyer.
What changes are allowed in the loan agreement?
There are situations when it is necessary to make changes to the loan agreement. They are carried out by means of annexes to the contract. Thanks to them, you can correct the content of the contract and introduce new provisions.
Usually these are changes in the repayment schedule, but they may also apply to the amount of commission, fees or currency in which the liability will be repaid.
How to prepare an annex to the loan agreement?
The annex to the loan agreement should be prepared in the same form in which the agreement was drawn up. It must be in it:
- the number of the contract to which it relates,
- date and place of conclusion of the annex,
- determining the parties to the contract,
- the date from which the changes become valid,
- signature of each party.
Withdrawal from the loan agreement
However, there are situations in which you can not only change the provisions of the contract, but completely withdraw from it.
Pursuant to the provisions, you have the right to withdraw from a loan agreement within fourteen days of its signing. Withdrawal from the loan agreement is based on a letter that you only need to send to the loan company. It is not necessary to state the reason why you decide to withdraw from the loan agreement. You can easily find the document template on the web.
Termination of the loan agreement
When the statutory fourteen days have passed, withdrawal from the contract is no longer possible. However, if you fail to comply with the terms of the contract, the lender has the right to terminate the loan contract. It will definitely do it if you become insolvent. However, if you regularly pay the liability, you are unlikely to be in danger.
Limitation of the loan agreement
If you are unable to pay back the funds you borrowed, the non-bank company will have a claim against them for repayment. So she will be able to claim them from you in court. However, he cannot chase you all his life. This is due to the loan agreement being time-barred.
Loans taken out in connection with business operations expire after three years. The limitation period for claims under the private loan agreement is after ten years.
Loan agreements between natural persons
Loans with para-bank companies are not the only option when you suddenly lack funds. A loan agreement between individuals is also possible. You can borrow money from friends, family and as part of so-called social landing. These contracts do not differ much in form from those concluded with the loan company. Most often, however, you must write them yourself.
Private loan agreement – template
The private loan agreement must contain all the elements listed earlier. A private loan contract template will therefore help you create the right document yourself.
Family loan agreement – template
A family loan agreement is concluded on the same terms as a private loan. So both a parent’s loan agreement and a sibling loan agreement are possible. The document template is the same in both cases.
Loan agreement between friends
A family loan agreement template will also be useful if you plan to grant a loan to friends. Such a contract is again no different from a typical loan agreement, the elements of which we have listed above. It may seem that a loan agreement to lend money to a colleague, niece or uncle is unnecessary.
We usually trust these people very much. However, you must remember that the law requires a contract to be signed if the loan amount is higher than one thousand dollars. When a loan from a friend awaits you, the contract is an important element of the commitment.
Loan agreement without interest and interest
The model loan agreement without interest also differs little from other contracts. Contrary to appearances, there are also entries about interest and interest to ensure that they are equal to zero.
The interest-free loan agreement is not very popular in loan companies, nor is the interest-free loan agreement. A template of these contracts will be useful if you borrow money to friends or family.
Loan agreement with a promissory note
A loan agreement with a promissory note is one of the secured loans. To such an agreement, therefore, a bill of exchange declaration is attached, specifying the right to fill in the bill of exchange in the situations indicated.
Loan agreement with security
A loan agreement with collateral is a form of loan that is granted against a car, machine or other movable property. The model loan agreement with insurance must therefore include a statement on the state of the borrower’s assets.
Tax on the loan agreement
The tax on the loan agreement is the tax that you must pay when you conclude the loan agreement. It amounts to 0.5 percent of the amount you borrowed. It also applies to private loans. However, it is worth checking whether you can get a release from it. Not every loan agreement means tax to be paid.
Loan agreement template
Remember how important a loan agreement is. The template or framework agreement you will get from the borrower is something that you should read carefully. Never sign it, so if you do not agree with any entry.