Loan agreement – what should it include?

One of the most difficult and one of the most important decisions was made, which will affect our expenses and finances. You have to take a loan. While making such a decision is important, you should not include its next steps. It is at this stage that the first questions are asked, the first calculations are created, the market and competition are analyzed. Have you ever wondered what should be in the contract you are entering into?


What should the loan agreement include so that it is legal and formally documented?

What should the loan agreement include so that it is legal and formally documented?

Let’s examine step by step how to make it properly. In fact, a family loan agreement should not be different from a money loan agreement with banks or institutions. Both in the first and second cases we are dealing with a legal document, based on which two parties make a specific commitment. All these elements, in a legal context, are relevant and should not be overlooked, regardless of the party with whom we conclude the contract.


Loan agreement pattern

Or rather a template, according to which we should act and prepare the entire document.

  • Specify the parties – remember that each contract must specify the parties involved in signing the documents. The borrower is the person who receives the loan. A lender is a person who gives a loan to the other party. In the contract, it is not enough to write about it – you will need identity documents (current!), Preferably ID cards with a full serial number.
  • Type of loan – the most important elements related to the loan. What is the repayment period? What is its amount?
  • Duration of the contract – usually the contract is signed for 12 months, but at this point you can develop issues related to the type of loan. In this aspect, it is worth considering a specific day (with a full date) in order to avoid possible misunderstandings
  • Interest – and therefore costs that the parties bear. The lender can request interest, but he can also decide to abolish the costs. The document should contain all information regarding finances, costs, hidden and additional fees and all information related to it
  • Return policy – since we have a date, we should also remember about the type of return. Do we want a cash refund? On bank account? Personally? There are several possibilities here, each of them is allowed, but it is important that the contract contains information on this subject
  • Can you pay it back earlier? And if so, in what form and with what effects?
  • Can you pay it back later? And if so, in what form and with what effects for both parties?
  • Consequences – or so-called penalties to be incurred by a person who does not comply with the contract. Here, the so-called penalty interest. It is important to include in this thread whether prompts will be sent and how often they will be performed. You can also take into account the number of prompts resulting in further proceedings and possible legal steps
  • Withdrawal from or withdrawal from the contract . In addition to the standard 14 days, during which everyone has the right to resign from the contract, it is worth considering other options for withdrawing from the contract
  • Complaint – that is, the rights of the borrower, due to non-compliance with the contract by the other party, i.e. the lender
  • Termination – can the lender terminate the contract? When? How? What are the consequences for both parties?
  • Signatures – the last step that determines the approval of all points, and thus, seals the created contract, implementing it.


Loan agreement – free template for download docs / pdf

Loan agreement - free template for download docs / pdf

The agreement, which contains all these points, we can prepare ourselves, or use ready-made patterns, during which we change only the most important elements and data. For comparison, check the pattern created by banks and non-bank companies. It is worth devoting a few extra minutes while creating it to dispel doubts. It is this document that protects you and the other party from any inaccuracies. If you have questions, it’s a good idea to contact a specialist or adviser.

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