LOAN CONTRACT

This contract prepared into between:

RUBINIA R. SACLOLO, of legal age, single, and presently residing

at Brgy. Bagong Kalsada, Naic, Cavite;

- and -

likewise of legal age, married , both with residence and postal address
at Brgy. Bagong Kalsada, Naic, Cavite.

WITNESSETH

That secured a loan from RUBINIA R. SACLOLO in the amount of

Forty Thousand Pesos (Php. 40,000.00) receipt of which duly acknowledge
under the above agreement prepared by both parti

The Personal Loan Agreement Template is a legal document that would be

completed by a lender in agreement with a borrower to establish the terms and
conditions of a monetary loan. The Note is legal and binding. This document is
considered to be a contract and therefore the borrower shall be expected abide by all
terms, conditions and governing laws. Payments must be paid, on time and per the
agreement signed by all parties.

What to Include in a Personal Loan

Contract?
A personal loan is a contractual agreement between two parties, known as the
“lender” and “borrower.” The lender may be a bank or other formal credit entity, or an
individual – but the loan contract will be legally binding in either case.

This lending contract must include several key provisions:

 Names of both borrower and lender, their complete addresses, and their
signatures.
 The state where the loan has been made.
 The date of the contract.
 The total amount of the loan.
 The interest rate for the loan.
 The repayment schedule, and how repayments will be applied to interest and
principle.
 The date by which loan repayment must be completed.

This contract may also require the signature of a guarantor, who acts as a repayment
fallback should the primary borrower default. Enlisting a guarantor, even if not
required by the lender, may improve the borrower’s creditworthiness, and might also
lower the interest rate and ease the lending terms.

Difference between a Personal Loan

and a Standard Loan?
Unlike student or mortgage loans, whose terms prescribe how funds may be spent,
personal loan money may be used for a range of purposes.
Since personal loans are more flexible financial products, not tied to a particular
purchase or purpose, they are often unsecured. This means that the debt is not tied
to any real assets, like a home mortgage is to the house or car loan is to the vehicle.
If a personal loan is to be secured with collateral, this should be specified in the
contract.

Repayment Options for a Personal Loan

In general, the rate of interest is specified in annual compound terms. Loan
payments are usually required on a monthly or weekly basis, though, so some
calculation will be required to determine the total that is due in each installment.

Since interest compounds – or gets lumped together with the original loan amount,
or principle – earlier loan payments tend to make less of a dent in the outstanding
principle. As the weeks and months pass, these payments, provided they are all
equal, will chip away at principle at a quickening rate. In any case, the contract
should clearly specify how each installment will be applied to the debt balance. The
standard is for repayments to go first to cover interest, and then to principle.

What happens if the borrower wants to expedite repayment? The contract should
specify whether there will be any penalties imposed on ahead-of-schedule
repayment. Since this is often considered to be in the interest of both borrower and
lender, early repayment is often not penalized.

Repercussions for Defaulting on a

Personal Loan
As with any other financial commitment, defaulting on a personal loan is bad news.
Missed payments and defaults are usually reported to the credit bureaus, where they
are treated as red flags that may follow the borrower for seven years or more.

In the event of default, the lender can enlist the services of a collections agency or
seek redress with a legal claim in court. If this means legal fees or other collection
expenses are incurred in the process, these too may be passed on to the borrower.

The loan contract may also allow for “acceleration,” which requires full repayment of
the remaining balance immediately should the borrower default. If a guarantor is on
the books, then this party may face a steep and immediate debt bill once the lender
has exhausted efforts to collect from the borrower – a potentially ruinous
development for a personal or business relationship.

For the borrower, it is always better to nip repayment issues in the bud before they
spiral out of control. Since debt defaults are so harmful to lenders too, they have an
incentive to try to work things out with the borrower. While borrowers should not bank
of changing lending terms midway through repayment, it may still be possible to
hash out some compromise to get things back on track.