Borrowing is a serious commitment that is documented by signing the contract between the lender and the borrower. One party grants another loan, however, on certain pre-determined terms. They are in the loan agreement, which is the most important document in case of incurring debt.
The contract should be read carefully before signing – it will apply throughout the duration of the loan, and any possible annexes or modifications will refer to this document. What does the loan agreement oblige each party to do? What should you know about this?
Credit agreement – what’s in it?
The loan agreement is a document signed by two parties to the transaction – one (bank) grants a loan and the other (borrower) receives money. Everything needs to be specified, however – who is taking the loan and with whom, when it comes to it, what is the amount of the loan, what currency is the loan granted in, what will the repayment look like, what is the interest rate on the loan and what are the additional conditions they bind it.
The agreement contains all entries regarding the amount of subsequent installments, as well as the date of their payment. It must also contain data on, inter alia, the commission charged by the bank or additional insurance – of a mandatory or voluntary nature. The loan agreement is such an important document because it contains all the conditions under which the loan was granted. Both parties from the moment the contract is signed (in two copies so that each party gets its own) must comply with the provisions contained therein. Otherwise, it will result in consequences that have also been recorded in it.
What does the loan agreement require?
The loan agreement obliges the bank to grant the borrower a loan in a certain amount. It is transferred in a way that will be most convenient for the client. It can be a transfer to his account or e.g. personal pickup. The borrower, on the other hand, obliges the loan agreement to pay installments on time plus interest accrued. Consequently, the person undertakes to repay the borrowed sum in full, plus interest, as well as additional charges such as commission or insurance. The contract contains provisions regarding a possible withdrawal from it. Therefore, it is worth reading everything carefully before signing it, because signing it is tantamount to agreeing to all its provisions. Before this happens, you can still try to renegotiate certain conditions and ask for details, to have no doubt later. After signing the contract, you must comply with the terms contained therein.
Online loan – what about the loan agreement?
At the moment, you can also take out loans online. Not everyone considers a similar form of incurring debt reasonable and safe, but it is extremely convenient and rather fast – hence it finds many interested parties. The application is sent via the Internet, and a credit decision can also be granted online. However, this does not mean that no credit agreement is concluded – on the contrary. It is usually delivered by a courier who, after confirming the identity of the person applying for a loan, becomes a witness to the signature. The signature on the document can also be placed at a bank’s stationary branch – traditional banks are also currently offering customers the option of taking loans online.
Until recently, it was the domain of payday loans granted by loan companies, but traditional banks have also adapted to modern times and are now taking advantage of the opportunities offered by new technologies. When it comes to online loans, in some cases formalities are minimal and everything can be done online. The agreement is approved in the network by logging into the specific bank’s website and signing it with the code from the active authorization tool. The loan agreement with all the commitments it contains is just as binding, whether it is in person or not.
What can be changed in the loan agreement?
It is possible to change certain provisions in the loan agreement – after signing it. Some information needs to be updated if it has changed – for example, the borrower has moved or changed his job. It is also possible to change the payment schedule if any problems arise – for example, someone lost a job as a source of income or is seriously ill and cannot pay the installments at the moment. In this situation, additional insurance can help, which will guarantee assistance. In the face of serious illness or death, or loss of job, the insurance company is obliged to cover the cost of credit up to a certain amount, also set out in the specific contract. However, if someone has not purchased such insurance, they can apply for renegotiation of the contract, e.g. defer payment of some installment, suspend repayment for some time (credit holidays) or extend the loan period. You can also try toloan consolidation if you have several.