Nowadays, acknowledgment of money lending and borrowing as an industry holds appropriate progress and comes with written agreement. Professionals working for lending companies guide borrowers through the ropes of loan arrangements. Nonetheless, having prior knowledge is important for both borrowers and lenders alike such as learning the significance of legal forms in the Philippines.
Lending and Borrowing without Written Agreement
Money lending and borrowing bring no written agreement complication between family and friends. It simply needs an exchange of words between the two parties. The borrower just needs to agree with the lender’s conditions. If the lender trusts the borrower enough, he or she would lend the money without any problem.
Although, no matter how much trust you have in a person, it does not mean he or she will give your money back. No matter how long you have known the person, you can never tell when he or she will decide to run away with your money. Apart from causing inevitable drama, lenders do not have much argument with no concrete proof to show in court.
Exchange of statements in court may lead to knots of lies either party might introduce just to save themselves. Only a solid document such as legal forms in the Philippines would turn the tables. If the document contains clear statements of the lender’s terms and condition, and the borrower has signed it, no need for verbal exchange to solve the case.
Loan Agreement: Legal Forms in the Philippines for Proof and Security
Two parties with no direct relation such as lending company and an individual borrower have an even greater need produce a written document. Loan Agreement also serves as borrower’s assurance to acquiring the lend money for borrowers and to retaking the money lenders have lend. It gives each party proof and security.
In the long run, a document known as “loan agreement,” is one of the legal forms in Philippines to aid both sides when unexpected discrepancy arises.
Most of the time, lenders create the loan agreement. Unless the borrower has a document, he or she can provide and have his or her own terms and conditions. It could work either way.
Basic Information to Include in Loan Agreement
Loan Agreement primarily needs basic to information from both parties: lender and borrower. Here’s a guide list:
1. Full Name of Borrower(s) and Lender(s)—Mark an indication to separate section for borrower from lender.
2. Borrower’s Section—Include all borrower’s information, such as, full legal name and address if you are an individual borrower. If more than one borrower, include all names. If business, indicate business name and its full Address.
3. Lender’s Section—Include all borrower’s information with the same information as described previously.
4. Guarantor/Cosigner Section—Include all guarantor/s’ information, such as Full Legal Name and Address. A Guarantor agrees to pay back the lender in the absence of the borrower. Provide this section if you have a guarantor (for the borrowers). You may or may not include this section. It depends on you (borrower). You may also add more than one guarantor.
5. Date and Location of Signing—Include effective Date of Agreement, stating where legal proceedings take place (specific country). This is the most important part of the loan agreement as it shows the agreement’s statues, active or inactive/expired. When deem unpaid, it prevents the borrower from leaving the country.
Numerical Details on Loan Agreement
When done with basic information, you may now proceed to the more important details present on a loan agreement. It includes loan transaction, payment and interest information. Numerical details surrounding the loan agreement legal forms in the Philippines are as follow:
1. Transaction Section—This is the Lender’s Exact Amount Detail Acquirement (After Lending the Money to Borrower), with the amount excluding any interest, and the Borrowed Money Exact Amount Detail
2. Payment Section—This pertains the detail how the borrowed amount will be repaid, frequency of payments (e.g. monthly, due on demand, one lump sum etc.), information on agreeable payment methods (e.g. cash, wire transfer, debit payments etc.), and clear explanation of allowable forms of payment (e.g. assets like real estate, vehicle).
3. Interest Section—Referring to the accrue date of interest, interest Detail (simple or compound; fix or variable). Simple interest calculation is determined on the unpaid principal amount whilst compound is determined on the unpaid principal amount and any interest that is unpaid. Fix rate means same interest rate throughout the loan lifespan while variable interest can change depending on certain factors. For lenders, if not charging interest, no need to include this section.
4. Pre-payment Section –Lenders may or may not require pre-payment. Commonly, lenders necessitate a percentage of principal before paying the remaining balance.
5. Collateral Section—Addition of collateral section assures the lender to retrieve the money with or without interest, depending on the two parties’ agreement. To be more specific, collateral are assets (vehicles and real estate) lenders may acquire in the absence of the borrower’s promised payment. When adding collateral section, list down all possible collateral you can accept.
Other Things to Consider Making the Legal Forms of the Philippines
When you have completed the form and fill it up with necessary details, consider having it notarized. You may also want to include witnesses to strengthen the agreement. This will greatly make it more valid and credible.