What is a Personal Loan Agreement?
There are different types of loans that are available in
the market but it is the personal loans that have the
maximum number of takers. The main reason for this
is the frequency of necessity of funds and also the
readiness with which they are available to the
borrower too. However, all the loans that are
borrowed are made through only after entering into an
agreement and the same applies for personal loans
too. A personal loan agreement is a binding
contract between the creditor and the debtor where
borrowing has taken place on specific terms and
conditions. It is these terms and conditions that govern the repayment or extension of the loan.
Majority of the jurisdictions set out specific rules and regulations which the lenders must
definitely comply with so as to grant loans to the borrowers. The major purpose of the Personal
Loan Agreement is in identifying and defining the components of a working relationship
between the two parties. It is also set out to identify the responsibilities of both the parties
involved and this holds good till the duration of repayment of the loan.
In most of the countries the loan agreement will have to comply by the standards that are set
out by the local laws or the national laws. This is in this manner in order to facilitate an
advantageous working relationship between the creditor as well as the debtor. And when there
is compliance shown towards these regulations, there is every possibility that one can seek
legal redress if there is a failure on the part of the parties involved in honoring the commitment.
The personal loan agreement will provide both the parties with legal protections as well as
rights should any of them fail in upholding the terms that are laid out in the personal loan
There are quite a number of issues which are defined and addressed in the loan agreement.
The agreement contains the amount loaned, full contact information of the parties, applicable
interest rate and repayment terms too. The responsibilities and rights of both the parties are
laid out in the text of the loan agreement. It is therefore, strongly recommended that the debtor
goes through the terms and conditions carefully, understands his responsibilities and rights
towards the creditor so that he does not feel he is caught unfairly in a lurch.
Personal loans may be saviors at all times. So, rather than putting all your savings into a major
purchase, you may go in for a personal loan so that you are prepared for a rainy day and at the
same time you are meeting your current requirement too.