How to sign a loan agreement online
When you loan someone money, you need proof that the loan was not a gift to the borrower. A loan agreement is proof of your commitment and outlines the terms of your loan.
It is important for both parties to be protected by a loan agreement which is why it needs your signature and theirs.
What is a loan agreement?
A loan agreement is a complicated legal document that binds and protects two or more parties entering into a lending agreement.
Loan agreements exist to detail exactly how much money has been lent and the specific requirements related thereto.
The lender, who sets the terms of the loan regarding interest rate, loan duration, and repayment payment period, forms most loan agreements.
Other terms settled in the initial agreement will include the loan amount, whether the loan is issued as a lump sum (most common) or periodic disbursements, and what happens if the borrower defaults on the loan.
The borrower then signs a promissory note certifying their promise to repay their personal loan per the agreed-upon terms.
There are many reasons to enter into a loan agreement. For instance, a family member borrowing money might take out a personal loan to purchase real estate.
Depending upon the terms of the loan agreement, the borrower then makes periodic loan payments (typically monthly payments), which will positively or negatively impact the borrower’s credit score depending upon compliance with the loan contract.
Whether you’re taking out a personal loan to start a business, purchase real estate, or create some financial breathing room, you need to have an ironclad loan agreement when any amount of money is borrowed or loaned.
Loan agreements can be difficult to draft because loan documents are legally binding contracts, and thus must contain fields for specific information.
Complicating matters more is how different types of loan agreements require different loan terms to be included in a contract.