Learn about business and personal loan agreements. Then create your digital documents to outline the details of loan repayments.
Learn about business and personal loan agreements. Then create your digital documents to outline the details of loan repayments.
A loan agreement or loan contract is a written agreement that specifies all the details of a personal or business loan, including the amount of money or the assets being lent, the repayment terms, and what happens if the borrower defaults (is unable to pay according to the terms). Loan agreements should be used even when lending money to a friend or family member. Unlike a casual IOU, a formal contract makes every detail clear for both parties, can be legally binding, and can help prevent disputes.
Loan agreements and promissory notes are very similar types of contracts. They both provide details about a debt that a borrower promises to repay. However, a loan agreement likely contains longer and more detailed clauses and is signed by both the borrower and the lender, while promissory notes are sometimes only signed by the borrower.
A loan agreement lets you set expectations with the other party to leave nothing up for interpretation. It serves as legal proof that money was borrowed, there was a plan for returning it, and what should happen if the plan isn’t followed. If you’re a lender, agreements give you leverage should you need to take action against nonpayment. And if you’re a borrower, they assure that, by law, you won’t be required to pay back more than the agreed-upon amount.
Include key terms of the loan, such as the lender and borrower’s contact information, the reason for the loan, what is being loaned, the interest rate, the repayment plan, what would happen if the borrower can’t make the payments, and more.
More complex loans, like mortgage notes, may include additional clauses to outline items like interest rate fluctuation or assets being put up as security.
E-signatures are legally binding. And going digital makes it easier than ever to create and sign legal documents like loan agreements. That’s why, in a 2020 Forrester Consulting study, 72 percent of respondents in financial services firms said they consider digital document processes essential to their business.
Financial businesses are making processes easier for themselves and their borrowers by going paperless. Sony Bank is using e-signatures to dramatically reduce the time it takes them to finish mortgage loan contracts. Work that used to take them two to three weeks now takes as little as one hour, and they’ve cut operational costs by 10 percent.
With Acrobat Pro, getting necessary loan contracts signed is smooth sailing. Of course, always get legal advice before creating or signing a loan agreement. And, as a borrower, be sure to read the entire agreement with your legal counsel before signing.
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Create a promissory note that delivers.
No matter the loan, lender, or borrower, it’s always a good idea to put it in writing. Find out the information you need and the fastest, most reliable way to complete a loan contract.
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Make sure your e-signatures comply with the UETA.
Delve into the applicable laws that govern electronic forms and e-signatures, and ensure that your digital paperwork complies with these legal requirements.
Manage agreements and meet legal requirements with Acrobat Sign.
No matter your industry or stage of business growth, use Acrobat Sign Solutions to streamline and simplify processes for accelerated results. Get started today.