Loan contract: everything you need to know

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A Loan contract is an agreement between two or more parties to regulate a certain legal-asset situation. Each day we each sign a surprising amount of contracts without even realizing it. In the morning we go to the bar to have breakfast, generally we pay at the cash desk our drink which will be provided to us shortly after.

We have entered into a contract in which one party pays a certain sum and the other agrees to provide a service. Leaving the bar, we buy a bus ticket that allows us to use the public transport service. We have entered into a second contract where one party pays a certain sum and the other agrees to transport us unharmed in a specific place. In this article we will talk about the loan agreement.

What is the loan agreement?

What is the loan agreement?

The loan contract is an agreement between two or more parties that regulates the transfer of a sum of money or a specific asset from one person to another. The person who grants the loan is called the lender , the person who receives the loan is called the borrower.

The object of the loan which, as mentioned, may be a specific sum or an asset must be returned in the same quantity and manner by the date previously agreed.

The loan can be interest-bearing if there were “fruits” generated by the loan, the so-called interests, or non- interest bearing , so the borrower must return only the capital on return. Another feature of the loan are the guarantees , these can be requested by the lender or not.

When to use the loan agreement?

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A person can find himself, due to a combination of factors, in the situation of having to face unexpected expenses at that moment and not having the liquidity necessary to be able to face these emergencies. The first solution is to go to a credit institution which will grant the loan to satisfy certain requirements by the applicant.

If you are unable to meet the requirements, contacting the network of close acquaintances (relatives and friends) can be a valid solution. Experience shows that many personal relationships have ended in the face of economic problems, the loan contract is the means capable of eliminating or at least limiting discord when a loan is made between private individuals.

Too often private lending is a verbal agreement to get out of financial suffering as soon as possible, this simplicity and speed of “stipulation” exposes the lender to the danger of not being able to recover his capital and find himself, in the worst case, to turn in a state of suffering.

In addition, if the lender wants to sue the borrower in court, he is responsible for the burden of proof. While through the use of the loan contract the conditions are clear, in the case of money handed over “by hand” a receipt is recommended and the burden of proof, in the event of judgment, is of the borrower.

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