While a loan is not something that we get on a regular basis, it can definitely be highly useful depending on your financial needs. In case you are looking to start a business, buy a house, get a new car, or face any kind of financial emergency, getting a loan might be the only possible solution. Fortunately, getting a loan is much easier these days as compared to a few decades back. This is all made possible thanks to simpler payments, lower interest rates, and, most importantly, simple loan agreement documents. In fact, you can apply for a loan document either online or offline as per your comfort.
But if you are getting a loan for the first time, even making a simple loan agreement can be quite confusing. Thus, we are here with a detailed guide on how to write a loan contract or a loan agreement contract.
Whether you want a basic loan agreement between friends or you want a contract for borrowing money from the bank, this guide will help you with it all. You will not only learn about the technical details of a loan agreement contract, but you will also find multiple loan contract template options down below.
In this article
What is a Loan Agreement Contract?
Since a loan agreement contract essentially determines all of the terms and conditions of your loan, understanding the same is highly important before making one.
Starting with the definition, a loan document or a contract of loan is a legal contract and agreement between lenders and borrowers. This contract of loan is used to determine, list, and explain all of the terms and conditions involved in a given loan. By creating and using a lending agreement, all involved parties are fully protected. Such a lending agreement will ensure that the lender is paid back the exact amount and the borrower is only paying back the exact amount.
While getting a loan of agreement is definitely important for getting a loan from the bank, it is equally important to have a loan agreement between friends as well. By making such an agreement, the lender friend is protected by stating that the provided money was a loan and not a gift. Thus, by using a basic loan agreement, even friends can be assured that their money is paid back on time.
Any personal loan contract or money loan agreement will have various details like the borrowed amount, interest rate, installment structure, loan duration, details of all parties, and much more that you will learn later on in this guide.
When do you need a Loan Agreement Contract?
Now that we have covered the basics of a loan agreement contract, some of you might be wondering about when exactly you need one. Well, as explained earlier, you should at least have a basic loan agreement whether it is for a bank loan or just as a loan agreement between friends. Even if you have a highly trustable friend, having a contract for borrowing money is supposed to help both parties including you as well. If you are the borrower, a money loan agreement will ensure that you are not paying back a higher amount than the one decided earlier. Similarly, a lender with a lending money contract can be assured that they are getting back their whole amount without any issues.
Components of a Loan Agreement Contract
While making a loan contract, simple details like the information of involved parties along with complex details like interest rate and loan amount are equally important. Thus, if you want to make a personal loan contract or a lending money contract, then there are various components that you need to mention. Any simple loan contract example will include components like the following:
- Identification of all involved parties
- Date of agreement and contract
- Total loan amount
- Loan interest rate and interest type
- Loan repayment terms and installment structure
- Loan defaulter provisions
- Signatures of all involved parties
- Choice of law as per your state
- Severability terms and conditions
- Entire agreement's terms and conditions
Wondershare PDFelement: Best Way to Write a Loan Agreement Contract
By checking the typical simple loan contract example given above, you should be ready to make your own individual loan agreement. While we have covered the technical details for the same, you also need to have the right tools for the same. One such great option is Wondershare PDFelement - PDF Editor Wondershare PDFelement Wondershare PDFelement since it offers all kinds of features for making an individual loan agreement. Since we have covered those later on in this guide, let’s go through the process of making a loan agreement contract right away:
To start, you have to first open Wondershare PDFelement on your PC.
Now, click on the Template option and search for a loan contract template.
After browsing the various options, pick any example of lending contract that you like and open it.
Then, start editing this loan agreement contract template as per your needs and the exact details that are needed for your contract. You can even use AI tools for this.
Once you are done creating your loan agreement contract, click on File and select Save As to export this loan agreement contract as a PDF file for sharing with others with ease.
How Does Wondershare PDFelement Facilitate in Writing a Loan Agreement Contract?
As you must have seen in this example of lending contract mentioned above, making an individual loan agreement with Wondershare PDFelement is quite simple and easy. But this is only the tip of the iceberg since Wondershare PDFelement offers even more features like the following:
- PDF Management: Being a PDF editor tool, PDFelement lets you perform basic PDF file functions like PDF merge, compression, conversion, and much more with ease.
- E-Signature: Since a loan agreement contract is only legally valid once it has the signatures of all the parties, PDFelement lets you add e-signatures with ease.
- Organization Tools: Once you have created a loan agreement contract, it will be saved within Wondershare PDFelement, which has an easy-to-use interface. This is great for managing and organizing your PDF files and documents.
- AI Tools: If you are writing a loan agreement contract for the first time, you should use the AI tools in PDFelement to automatically write correct information in your contract. This is quite handy for a legally binding loan agreement contract.
- Loan Contract Template: Last but not least, Wondershare PDFelement comes with a wide range of loan contract templates to choose from. Not only does this make it possible to quickly create loan contracts, but you can even find great looking and legally binding templates for loan contracts.
Tips for a Foolproof Loan Agreement Contract
Once you start making loan agreement contracts using Wondershare PDFelement, the whole process will only get easier and simpler for you. While the tools offered by PDFelement are definitely some of the best, there are still a few tips and insights that you should know for making a foolproof loan agreement. If you want to create a secure loan agreement contract that protects all of the involved parties, then you should keep these tips in mind:
- Make sure all the information is correct and precise.
- Different terms and conditions should be mentioned clearly.
- All involved parties should agree to the contract.
- Include exact steps and rules for defaulters.
Conclusion
Whether you are getting a small personal loan for financial emergencies or a bigger loan for getting a home, getting a safe and secure loan is highly important. If you want to protect yourself as a borrower or, more importantly, as a lender, having a secured loan is crucial. And the only way to ensure the same is to have a loan agreement contract for your loan. Since such an agreement states all of the terms and conditions of a given loan, we have explained a complete guide on how to write a loan contract up above. You will even learn how to find a loan contract template and use the correct tools for the same.
