Loan agreement: private arrangement or arrangement agreed with a bank

A loan contract is a legal contract between the lender and the borrower. The subject of such a contract is a sum of money recorded in the contract.

It is the task of a loan contract to secure both sides, therefore the most important agreements are fixed in writing in a loan contract and confirmed by the signatures of both parties. The contract is usually for direct lending, and there are also loan contracts for indirect lending.

The loan amount and the agreed interest should be recorded

The loan amount and the agreed interest should be recorded

  • the setting of collateral makes sense (e.g. in the form of assignments or transfers of property)
  • important components such as loan amount, term, interest rate, method of repayment, termination modalities and arrears should be specified in the loan contract
  • an acknowledgment of debt certified by the notary about the amount lent makes sense

As a lender, you should only lend money to relatives or friends that you actually don’t need (even over a long period of time).

Such a contract can be drawn up informally on loans. Nevertheless, you should make sure that all important agreements such as loan amount, interest rate, contract term, repayment method, termination modalities and similar things are mentioned in the contract.

Loan agreement between the bank and a borrower

Loan agreement between the bank and a borrower

In addition, the names and contact details of the parties involved should of course be given. Templates for such loan contracts are now available in a wide variety of variants on the Internet. All you have to do is download, fill in and print it out.

For a loan agreement between the bank and a borrower, for example in the context of mortgage lending, the legislature has issued its own legal provisions. In particular, the so-called pre-contractual information obligation on the part of the bank in the context of consumer loan contracts is regulated here.

  • If the bank does not comply with the regulations on the mandatory information requirements, the borrower can revoke the contract or contest it in court.


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