Personal Loans: What is a loan agreement? MintGenie explains
A personal loan agreement, occasionally referred to as a personal loan contract, is a legally binding document that delineates the terms and conditions of a loan between a borrower and a lender (such as a bank or credit union). This document essentially details the rights and responsibilities of both parties engaged in the loan.
A typical personal loan agreement generally encompasses the following essential elements:
It’s essential to thoroughly review the agreement before signing. If anything is unclear, don’t hesitate to ask questions. Certain lenders may be open to negotiating specific terms, particularly fees. Additionally, make sure to retain a copy of the signed agreement for your records.
The majority of personal loans involve fixed monthly installments over a predetermined term. Certain lenders might provide alternatives for bi-weekly payments.
Failure to make a payment will result in a late payment fee and potential damage to your credit score. If you encounter difficulties in repaying, contact your lender at the earliest opportunity.
Typical fees comprise processing fees, origination fees, prepayment penalties, late payment penalties, application fees, and credit check fees. Ensure you compare these fees across different lenders.
Numerous lenders provide pre-qualification tools enabling you to check your loan eligibility without affecting your credit score.
Typically, you’ll need to provide ID proof, address proof, income proof (such as salary slips or bank statements), and sometimes tax returns. Certain lenders may request additional documentation.
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