Factors To Consider While Drafting Loan Contract Template
Factors To Consider While Drafting Loan Contract Template
The creation of a loan contract requires firm fidelity to various rules and regulations. In the ideal case a loan agreement is presented in front of an attorney to check for its correctness and authenticity. However if that can not be done then you can follow certain elementary rules to make a loan contract. Even then you need to be carful about the framing of the contract and all its terms and conditions should be properly read before signing it. As it is a legal document and is permitted to be used in the court in case of any dispute; so it is essential that you take great care while formulating one.
You can even search the internet for any available loan contract template. There are several things that need to be checked for in a template before using it for drafting a loan contract. The first thing is schedule of the loan repayment. The contract should clearly state the due date for the repayment of loan. This helps in making things easy for the borrower of money and also the lender. This way the borrower does not forget to miss any payment and it also keeps reminding the borrower that he/she should not violate any rule of the agreement; else he/she might have to face the stated consequences.
Another important part of a loan contract template is the names of the parties involved which are namely the borrower, lender, a witness and an independent member like a lawyer. Other then these details the contract also needs to have the space for mentioning the date of the contract and the signatures of the two parties involved.
The third thing to be considered is the financial section which consists of the amount of monthly loan payment, total amount of the loan and the due date for the payments. The monthly interest rate and the annual percentage also require prime mention. Other monetary charges of the borrower are also to be included in the loan contract template.
The final thing to consider is the penalties which would be imposed on the borrower in case he/she fails to repay the loan.
