What is a loan agreement? In what form can we and should we conclude a loan agreement? What provisions govern loan agreements? What is a framework loan agreement? What elements should the loan agreement contain? How to write a money loan agreement? When is the loan agreement invalid? What changes are allowed in the loan agreement? How to prepare an annex to the loan agreement?
What is a loan agreement?
A loan agreement is an agreement whereby one party transfers to another the ownership of money or an item specified as to the species, and the other in return undertakes to pay the same amount or item as defined as after the expiry of the time specified in the agreement.
A money loan agreement is one of the most frequently concluded business transactions. At the same time, it is the simplest loan operation. You’ll meet her for sure if you want to take advantage of an online loan.
In what form can we and should we conclude a loan agreement?
The loan agreement is a consensual agreement. This means that only a consistent declaration of intent by both parties is needed to conclude it. This means that even an oral contract will be valid, as long as the desire to enter into an undertaking is presented in a sufficiently understandable way.
Exceptions are loan agreements for an amount exceeding one thousand zlotys, which according to the law should always be in writing. In practice, however, loans with loan companies are only in writing.
This is a much safer solution because the signed document is valuable evidence in the event of any disputes between the borrower and the lender. So it’s always better to seek a contract in writing.
What is a framework loan agreement?
Many people wonder: “What is a framework loan agreement”? It is a document that the loan company sends to the client interested in the offer. It sets out the rules on which the loan will be granted. It mainly includes:
- detailed loan terms,
- dates of loan granting and repayment,
- procedures for dealing with situations where deadlines are not met.
This is a document that you should read very carefully before signing. It may happen that there are errors or very bad records for you.
What elements should the loan agreement contain?
A well-drawn loan agreement should contain a number of elements. Which of them is definitely necessary?
- Place and date of the contract
- Parties to the contract together with relevant data for their recognition
If the contracting party is a natural person, you must provide your name, address, ID card or passport number. However, in the case of a legal person, the full name of the company, address of its registered office and NIP, KRS and REGON numbers should be provided.
- The subject of the contract
The contract must clearly indicate the subject of the loan. If it is money, the amount should be provided both digitally and in words, and the currency should be specified. The repayment period is also specified here.
- Conditions for the return of the undertaking
This part of the contract contains a provision on how the refund will be made. It can be a cash form or a bank transfer. An additional provision is usually clauses, specifying whether repayment will take place in installments or once, as well as which commissions and interest rates it entails.
- Declaration of the borrower’s assets
This is an element that appears in collateral loans. It specifies the form of securing the contract. Most often it is a promissory note, pledge of real estate or transfer of ownership as security.
- Terms of withdrawal
Here, you specify the conditions that each party must meet if they want to withdraw from the contract.
- Website signatures
They confirm that the parties agree to the terms of the contract.
How to write a money loan agreement?
If you conclude a loan agreement with a non-bank company, you will definitely get a framework agreement to sign. You can negotiate its terms, but you don’t have to write it down from scratch.
The situation is different if you conclude a contract with an individual. Then it is best to use ready-made designs available on the web. However, make sure that the contract includes all of the elements listed above.
When is the loan agreement invalid?
There are situations when the loan agreement is not valid. This happens when the provisions of the concluded contract are inconsistent with the generally applicable law. For example, it may be inconsistent with the provisions of the Anti-usury Act.
Such situations, however, occur very rarely, because loan companies care about the correctness of documents. However, if you have doubts about the compliance of any of the records, you should consult a lawyer.
What changes are allowed in the loan agreement?
There are situations when it is necessary to make changes to the loan agreement. They are carried out by means of annexes to the contract. Thanks to them, you can correct the content of the contract and introduce new provisions.
Usually, these are changes in the repayment schedule, but they may also apply to the amount of commission, fees or currency in which the liability will be repaid.
How to prepare an annex to the loan agreement?
The annex to the loan agreement should be prepared in the same form in which the agreement was drawn up. It must be in it:
- the number of the contract to which it relates,
- date and place of conclusion of the annex,
- determining the parties to the contract,
- the date from which the changes become valid,
- signature of each party.