A simple interest loan agreement is a contract between a borrower and a lender that outlines the terms of the loan, including the amount borrowed, the interest rate, and the repayment schedule. This type of loan is commonly used for personal loans, small business loans, and auto loans. If you are planning to borrow or lend money through a simple interest loan agreement, it is important to have a written contract to protect both parties.
Here is a sample simple interest loan agreement that you can use as a template:
Borrower Name: _____________________________
Lender Name: _______________________________
Loan Amount: _______________________________
Interest Rate: _______________________________
Loan Term: _________________________________
Monthly installments of ___________ for _______ months.
Terms and Conditions:
1. Loan Amount – The borrower is loaning the lender the amount of _______________________ (the “Loan Amount”).
2. Interest – The borrower shall pay interest on the Loan Amount at a rate of ___________ percent per annum.
3. Loan Term – The Loan shall be repaid over a period of ___________ months.
4. Repayment Schedule – The borrower shall make monthly payments of ___________ to the lender for the duration of the loan term.
5. Prepayment – The borrower may pay off the Loan in full at any time without penalty.
6. Late Payments – If the borrower fails to make a payment within ___________ days of its due date, the borrower shall be charged a late fee of ___________ percent of the payment amount.
7. Default – If the borrower fails to make a payment for ___________ consecutive months, the lender shall have the right to declare the entire Loan Amount due and payable immediately.
8. Governing Law – This Loan Agreement shall be governed by and construed in accordance with the laws of the State of ___________.
9. Entire Agreement – This Loan Agreement contains the entire agreement between the parties and supersedes all prior discussions and agreements between them.
Borrower: _________________________ Date: ___________
Lender: ___________________________ Date: ___________
This sample simple interest loan agreement provides a basic framework that can be customized to suit your specific needs. When drafting a loan agreement, it is important to be clear and detailed about the terms and conditions to avoid misunderstandings or disputes. Always seek professional legal advice when drafting a loan agreement to ensure that it is legally binding and enforceable.