The content of the loan agreement includes the precise details of the agreement that has transpired between lender and debtor. Not only that, the agreement should also consider the standard government laws that is already in effect or established. Since the laws were created to protect all people, it is beneficial to both parties concerned.
Defined and addressed in the contract are the issues concerning the agreement. First and foremost, the rights and obligations of both parties must be defined in the written contract. Termination of contract and termination fees should also be included. Commonly, you will find the interest rates and other applicable fees included in the agreement.
It is important to note that some banks do report deferred payments as delinquent. Therefore, it is crucial to ask lenders how they report to credit bureaus before entering into a contract. Payments reported as past due can reduce FICO scores. Depending on credit scores, a reduction of ten points can place debtors in a lower credit category; making it difficult to obtain credit in the future.
Besides a standard loan for which a loan agreement is drawn up, there is another popular type of loan, the demand loan. That is a short term loan, with a period of repayment for up to 180 days. The date for the repayment of the loan is not fixed, and the interest rate for it is a floating one. The demand loan offers advantages for both borrowers and lenders. The lender can demand the repayment of the loan at any time, and on the other hand, the borrower does not need to adhere to a repayment in installments, as the repayment should be made for the entire amount. Furthermore, demand loans are easier to qualify for.