LOAN AGREEMENT: TERMS AND CONDITIONS

 

1. LOAN AMOUNT AND DISBURSEMENT

1.1 Loan Amount: The Lender agrees to provide a loan to the Borrower in the principal sum of [Loan Amount], which is the total amount of funds the Lender has agreed to lend to the Borrower.

1.2 Disbursement of Funds: The Lender shall disburse the Loan Amount to the Borrower by [Bank Transfer/Cheque] to the Borrower's designated account or address. The Loan Amount shall be disbursed on or about [Disbursement Date].

1.3 Purpose of the Loan: The Borrower agrees to use the Loan Amount exclusively for the following purpose: [Specify Purpose of Loan]. The Borrower agrees not to use the loan for any other purposes without prior written consent from the Lender.

2. INTEREST RATE

2.1 Interest Rate: The loan shall bear an interest rate of [Interest Rate] per annum, calculated on the remaining balance of the loan.

2.2 Interest Calculation: Interest will be calculated on a [daily/monthly/annual] basis and compounded [daily/monthly/annually].

2.3 Changes in Interest Rate: If the loan interest rate is variable, the rate may change in accordance with the following index or benchmark: [Benchmark Rate, e.g., LIBOR, Federal Reserve Rate]. The Borrower will be notified in writing of any changes to the interest rate.

3. LOAN TERM AND REPAYMENT SCHEDULE

3.1 Loan Term: The Borrower agrees to repay the loan in full by the maturity date, which is set at [Loan Term Duration] from the date of disbursement of the loan.

3.2 Repayment Schedule: The Borrower agrees to make monthly payments of [Payment Amount], due on the [Day] of each month, beginning on [First Payment Date]. The Borrower shall make payments until the loan is paid in full.

3.3 Payment Method: Payments will be made via [Bank Transfer, Check, Direct Debit, or Other Payment Methods] to the Lender’s account specified in writing. Payments will be applied first to interest, then to principal.

3.4 Final Payment: The Borrower agrees to pay the remaining balance of the loan in full by [Final Payment Date], including any accrued interest, fees, and charges.

4. LATE PAYMENT AND DEFAULT

4.1 Late Payment Fees: If the Borrower fails to make a payment within [X] days of the due date, a late fee of [Late Fee Amount] will be applied to the outstanding balance.

4.2 Interest on Late Payments: In the event of a late payment, the Lender reserves the right to charge additional interest at a rate of [Default Interest Rate] per annum on the overdue balance.

4.3 Default: The Borrower will be considered in default under this Agreement if any of the following occurs:

  • The Borrower fails to make a payment within [X] days of its due date.
  • The Borrower declares bankruptcy, insolvency, or undergoes any financial restructuring.
  • The Borrower provides false or misleading information to the Lender.
  • The Borrower breaches any other term of this Agreement.

4.4 Consequences of Default: If the Borrower defaults, the Lender may:

  • Declare the entire outstanding balance of the loan, including principal, interest, and fees, immediately due and payable.
  • Initiate collection proceedings and/or legal action to recover the outstanding balance.
  • Take possession of any collateral (if applicable) provided as security for the loan.

4.5 Collection Costs: In the event of default, the Borrower agrees to reimburse the Lender for any costs incurred in collecting the debt, including legal fees, court costs, and collection agency fees.

5. PREPAYMENT

5.1 Right to Prepay: The Borrower may, at any time, prepay the loan in full or in part, without incurring a prepayment penalty.

5.2 Effect of Prepayment: Any prepayment made by the Borrower will first be applied to accrued interest and then to the principal balance. The Borrower may request an updated payment schedule after making a prepayment.

5.3 Partial Prepayment: In the event of a partial prepayment, the Borrower’s future monthly payment may remain the same, or may be adjusted at the Borrower's discretion, subject to the Lender’s approval.

6. SECURITY AND COLLATERAL (IF APPLICABLE)

6.1 Secured Loan: This loan is secured by the following collateral, which the Borrower agrees to pledge as security for repayment of the loan: [Collateral Description] (the "Collateral").

6.2 Possession and Sale of Collateral: If the Borrower defaults on the loan, the Lender has the right to take possession of the Collateral and sell it to recover the outstanding loan balance, including all accrued interest and fees.

6.3 Insurance Requirement: The Borrower agrees to insure the Collateral against loss, theft, damage, or destruction and to provide proof of insurance to the Lender upon request. The Lender shall be named as an additional insured party on the insurance policy.

6.4 Release of Collateral: Upon full repayment of the loan, including any accrued interest and fees, the Lender agrees to release the Collateral back to the Borrower.

7. WARRANTIES AND REPRESENTATIONS

7.1 Borrower’s Representations: The Borrower represents and warrants to the Lender that:

  • The Borrower has the legal capacity and authority to enter into this Agreement.
  • The Borrower has disclosed all material financial information to the Lender.
  • The Borrower is not in breach of any other loan agreement or obligation.

7.2 Lender’s Representations: The Lender represents and warrants to the Borrower that:

  • The Lender has the legal capacity and authority to provide the loan.
  • The Lender will comply with all applicable laws and regulations in the disbursement and management of the loan.