What is a loan agreement
Turning to the bank for a consumer loan, the borrower assumes certain obligations, and the loan agreement becomes the main document fixing the rights and responsibilities of the parties to the transaction.
In the loan agreement are all significant terms of borrowing: loan size, loan term, interest, the amount of commissions and additional fees. There are important points of this document that need attention first.
How much is a loan?
The full cost of the loan, in accordance with the requirements of current legislation, must be specified in the contract. It consists of the following components:
- Principal amounts;
- Interest accrued;
- The amount of fees for issuing, servicing and accepting payments to repay a loan.
The lender is obliged to indicate the total overpayment on the loan and include a repayment schedule as an annex to the contract, in which the size of the mandatory payments and the dates of their payment are presented. The borrower can independently calculate the loan.
Specify in the loan agreement the date from which the accrual of interest on the loan begins. It is desirable that it corresponds to the date of crediting of borrowed funds to the client's account, and not the date of transfer by the bank. You can try to agree with the bank on changing the date of making mandatory payments so that they correspond to the day of receiving wages, rather than causing problems and delays every month.
If a mortgage loan is requested, it is worthwhile to familiarize yourself with the bank’s tariffs for settlement and cash services and to clarify which loan processing costs will have to be paid separately.
In the tariffs of the bank you can find many interesting fees and charges. Sometimes a borrower has to pay about 10% of the amount for the provision of a loan, and is obliged to pay interest for the entire loan. Servicing and opening a loan account is a direct obligation of the creditor bank, but this account is necessary for internal procedures, and not for the borrower. The Central Bank has forbidden to collect from customers a fee for maintaining and creating such accounts, but often banks continue to pay monthly fees.
Is it possible to repay a loan early?
Not always at the time of registration of the loan appear thoughts about early repayment, but it is better to think about it in advance. A moratorium on repayment of a loan before a specified period may subsequently cause a lot of trouble. After all, you will not be able to quickly pay off the current loan, draw up other obligations, become the full owner of property acquired on credit. If you decide to terminate the contract ahead of time, you will have to pay the bank a fine or an additional fee, which can reach several percent of the loan amount.
First make sure that the bank is not against early repayment of the debt and you can quickly return the money to save on overpayment.
How much will you have to pay for the delay?
Another interesting subsection of the loan agreement is devoted to penalties for violation of the terms of borrowing. For non-compliance with the amounts and deadlines for making the mandatory payments specified in the repayment schedule, the bank sets daily additional fees that increase the amount of interest charged during the period of delay. Increased interest and penalty may be calculated based on the total amount of the loan or on the balancedebt, or the amount of overdue payment. If you take a loan in cash, please specify this information.
At the slightest violation of the schedule, information about this is included in the credit file, so make payments on time and a little before the due date. The amount of payments should include fees for receiving or transferring funds. If the delay is more than 10 days, the bank can start the procedure for collecting the balance of debt and file a lawsuit with the court. Refine the procedure for these decisive actions to avoid unpleasant surprises.
The obligations of the borrower under the terms of the loan agreement may include the requirement to inform the bank about changes in the borrower's data: changes in marital status, change of name, actual place of residence or address of registration, place of work, contact information, level of income and other information.
In drawing up and studying the loan agreement there are no trifles that can be neglected. Each phrase, especially written in small print, can be decisive in assessing the profitability of the loan.