short form loan agreement
Short Form Loan Agreement: Loan Agreement vs Promissory Note
Not everyone is familiar with loan agreement, so they may not be familiar with the short form loan agreement either. But let’s not forget that loan, money lending, debt, or money borrowing has been a regular part of our lives. In most cases, we can’t help it. We need to borrow money because of the emergency situation to our financial standing. That’s why it is better to familiarize yourself to loan agreement so you can avoid mistakes.
Understanding Loan Agreement
This type of agreement comes in various names, including term loan, IOU, promissory note, or note payable. The Loan Agreement is the written contract between the lender and borrower concerning the details of the loan, including the repayment schedule. The templates for the agreement can be long or short, resulting in short form loan agreement. In most cases, the template is quite generic and general and it may not contain the details of the loan.
The Loan Agreement can be functional be personal loans (between family or friends), real estate purchase loan, down payments, student loans, business loans, and much more. The agreement is crucial because it will protect both parties in terms of the loan repayment scheme. It protects the lender because it will enforce the borrower’s commitment to repay their debt in either lump sum or in regular payments. It also protects the borrower because it will specify the loan details for their records. It will also be beneficial to keep their tracks when making payments.
Promissory Note vs Loan Agreement
A lot of people often mistake the promissory note with the short loan agreement. In nature, they are completely different. The promissory note is used to manage simple loan terms while the loan agreement has more details, especially about the payment schedule. Moreover, the promissory note only needs the borrower’s signature while it takes both parties’ signatures for the loan agreement.
The Crucial Elements
You want to look for these elements when looking at the loam agreement.
- Payment method. This refers to the method used by the borrower to pay the loan
- Repayment schedule. This can be managed through a fixed date or through a demand notice for the loan agreement.
- The amount of the loan. It refers to how much money is being lent, the applied interest rate, and how much money should be paid in every repayment schedule
We have several examples for the loan agreement templates. Feel free to check the available short form loan agreement templates we have.