The loan agreement is the materialization of the agreement between the lender and the borrower. The document contains all the information on the sum borrowed, the overall interest rate and the duration. The loan agreement also sets out the terms of early repayment and lapse of the term by the lender, particularly in the case of non-payment of monthly payments. Once the contract has been signed, neither party may challenge any of the elements of the loan, unless this possibility is specified.
If most contracts involve a specialized body such as a bank or a credit company, lending money as an individual must also be formalized (Articles 1316 and following of the Civil Code), this document being the only proof acceptable by the courts in the event of a dispute with the borrower . In the case of a commitment, it is essential that the borrower become fully aware of the terms of his contract before signing it.
Loan contracts, compare before signing
Following a major water damage, Marc must buy some of his furniture. Compensation from his insurance company asking several weeks, he decided to apply for a loan. If the interest rate is obviously a criterion of choice, the comparison of offers also relates to the possibility of repaying the loan early with a minimum of costs. As soon as the compensation paid by his insurance, he wants to pay the loan to limit the cost of interest. Most credit agencies apply the law to the letter with an allowance of 0.5% of the outstanding capital when the credit term is less than one year and 1% for loans longer than 12 months.
Carla and Mario have just signed a loan agreement to buy a car. They had the choice between several offers of credit companies, that of the car dealership as well as their bank. When comparing the final cost of the loan, it turned out that the garage offered additional guarantees such as assistance and maintenance. The interest rate is slightly higher, but the associated services prompted the couple to choose this solution. Although the loan is formally signed, repayments will only begin 90 days after the delivery of the vehicle, as this facility is specified in the loan agreement.