Loan agreements are basically binding contracts between a lender and a borrower that specify the terms and conditions that rule the extension and repayment of the loan. The terms and conditions laid down in the loan agreement are in accordance with the local and national laws prevailing. This arrangement is generally useful for both the lender and the borrower. It gives both a clear picture of the terms and conditions on which the lending is done. It also defines relationship and what responsibilities each party has for the duration of the loan.
In addition to the amount that is given as loan, full contact information for both the lender and the borrower is included. Along with this any fees applicable, rate of interest, etc. are included to determine the final cost associated from the loan. The repayment terms and the interest rate calculation are included. Agreements also include penalties that may be involved with paying the loan off ahead of schedule (i.e. is the foreclosure). Finally, the default penalties, the services offered by the lender etc are also included. Whatever kind the loan is, personal loan or car loan the loan agreement is made to ensure the legality in the transaction and ensure the loan repayment.