Borrower – The person or company that receives money from the lender, who then has to repay the money according to the terms of the loan agreement. While loans can be made between family members – a family credit contract – this form can also be used between two organizations or companies that have a business relationship. After approval of the agreement, the lender must pay the funds to the borrower. The borrower will be tried in accordance with the agreement signed with all sanctions or judgments against them if the funds are not fully repaid. In the event of a subsequent disagreement, a simple agreement will serve as evidence to a neutral third party, such as a judge, who can help enforce the treaty. Guarantee (personal) – If someone does not have enough credit to borrow money, this form allows someone else to be liable if the debt is not paid. In general, a loan agreement is more formal and less flexible than a change of sola or an IOU. This agreement is generally used for more complex payment agreements and often provides the lender with increased protection, for example. B borrower representatives, guarantees and borrower alliances. In addition, a lender can normally speed up the credit in the event of a default, which means that the lender can make the total amount of the loan, plus interest due and immediately, if the borrower misses a payment or goes bankrupt.
A simple loan contract describes the amount borrowed, whether interest is due and what should happen if the money is not repaid. Default – If the borrower is late in payment due to default, the interest rate is due according to the lender`s agreement on the loan amount until the loan is fully repayable. Relying solely on a verbal promise is often a recipe for a person who gets the short end of the stick. If the repayment terms are complicated, a written agreement allows both parties to clearly define all the terms of payment and the exact amount of interest due. If a party does not respect its side of the agreement, the written agreement has the added benefit that both parties understand the consequences. Guaranteed Loan – For people with lower credit scores, usually less than 700. The term “secure” means that the borrower must establish guarantees such as a house or a car if the loan is not repaid. It is therefore guaranteed to the lender to receive an asset from the borrower if it is repaid. The loan agreement should clearly state how the money is repaid and what happens when the borrower is unable to repay. A lender can use a loan contract in court to obtain repayment if the borrower does not comply with the contract. A loan agreement is a written contract between two parties – a lender and a borrower – that can be obtained in court if a party does not maintain its end. A Parent Plus loan, also known as “Direct PLUS,” is a federal student loan that is received by the parents of a child who needs financial assistance for the school.