LOAN-AGMT
Free · All 50 States · Updated July 2026Loan Agreement
A bilateral contract outlining the terms and repayment conditions of a monetary loan.
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What Is a Loan Agreement?
A Loan Agreement is a bilateral contract between a lender (the party providing the money) and a borrower (the party receiving the money). It documents the exact sum borrowed (principal), the interest rate charged, the repayment schedule (installment, lump-sum, or demand), and what happens if the borrower defaults.
Unlike a Promissory Note, which is a one-way promise to pay signed only by the borrower, a Loan Agreement contains mutual covenants, representations, and warranties signed by both parties.
Why You Need a Loan Agreement
A written Loan Agreement protects the lender's capital by establishing a clear legal path to collect unpaid debts. It prevents disputes between family members, friends, or business associates by setting concrete payment timelines, defining late fees, and outlining collateral requirements.
Crucially, it must comply with state-specific usury laws that cap the maximum legal interest rate that can be charged to avoid making the loan contract illegal and void.
Key Components
1
Lender & Borrower
Legal names and addresses of both the lending party and the borrowing party.
2
Principal Amount
The exact amount of money being lent.
3
Interest Rate & Usury
The interest rate charged, complying with state-specific usury caps.
4
Repayment Schedule
Specifies payment dates (weekly, monthly, bi-weekly) or a single lump-sum date.
5
Collateral / Security
Identifies any property or assets pledged by the borrower to secure the loan.
6
Late Fees & Default
Details penalties for late payments and the lender's right to accelerate the debt.
Questions & Answers
Frequently Asked Questions
What is the difference between a secured and unsecured loan?
A secured loan is backed by collateral (like a car or property) that the lender can seize if the borrower defaults. An unsecured loan relies solely on the borrower's promise to pay.
What is usury?
Usury is the illegal practice of lending money at unreasonably high interest rates. Each state has specific statutes (usury laws) defining the maximum interest rate allowed.
What is debt acceleration?
An acceleration clause allows the lender to demand immediate repayment of the entire remaining loan balance if the borrower misses a payment or breaches the agreement.
Loan Agreement by State
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AlabamaAlaskaArizonaArkansasCaliforniaColoradoConnecticutDelawareFloridaGeorgiaHawaiiIdahoIllinoisIndianaIowaKansasKentuckyLouisianaMaineMarylandMassachusettsMichiganMinnesotaMississippiMissouriMontanaNebraskaNevadaNew HampshireNew JerseyNew MexicoNew YorkNorth CarolinaNorth DakotaOhioOklahomaOregonPennsylvaniaRhode IslandSouth CarolinaSouth DakotaTennesseeTexasUtahVermontVirginiaWashingtonWest VirginiaWisconsinWyoming