- What does the loan agreement contain?
- Credit transaction procedure
- Content of the loan agreement
- Acts for the conclusion of a loan agreement
- What if the bank entered illegal terms into the agreement
- What to pay special attention to when concluding a contract
The conclusion of a loan agreement is the last stage of a cash borrowing transaction. The bank and the borrower sign an agreement, which specifies the terms of the loan. The final transaction procedure is of prime importance, since the borrower undertakes clear obligations when signing the contract.
What does the loan agreement contain?
What clauses of the contract should the future debtor pay special attention to? All this, as well as the procedure for concluding a money-borrowing transaction, is described in the article.
Credit transaction procedure
If the bank approves the borrower’s application, the preparation of the main act – the loan agreement – begins. The draft agreement is an employee of the credit department on the basis of information specified by the client in the application. After that, the bank management considers the project and makes a decision – to leave this option or make changes.
At the same time, the following factors are important for a credit institution:
- the ability of the loan to be returned by the possible debtor;
financial condition of the borrower;
content of the client’s credit biography .
If the management of the bank is not satisfied with some points, then the project is submitted for adjustment. After drawing up a new contract, with him familiarize the borrower. The client, first of all, studies the terms of the act and then either agrees to sign or refuses the bank to conclude the transaction.
The final stage of the credit transaction is the conclusion of an agreement. A bank employee and a client, at a predetermined time, sign a contract. From this moment on, the borrower becomes the debtor of the credit organization.
Content of the loan agreement
The main act of the transaction of monetary borrowing consists, as a rule, of standard points. If the loan is issued for a specific purpose, then the points are more, because there is information regarding the subject of the loan.
Meanwhile, each contract contains information about:
- type of credit product;
- term and amount of debt;
- the procedure for granting borrowed funds;
- the form and date of issue of money.
In addition, a list of acts that the prospective debtor provides during the design of the product.
The agreement also contains full information on the reliability of each side of the credit transaction – the bank and the loan recipient. This section indicates that it threatens the debtor or creditor for violation of a particular condition and prescribes the procedure for applying penalties.
In addition to the duties, the act contains information on what rights the borrower and the bank are entitled to. For example, an employee of a credit institution specifies in a contract in which cases a bank has the right to demand repayment of its debt ahead of time.
If borrowed funds are provided with a guarantee, then a separate clause of the agreement concerns guarantees of debt repayment. This section indicates:
- the number and content of the pledge agreement;
- numbers and content of contracts signed by the guarantors.
Acts for the conclusion of a loan agreement
To get borrowed funds, the act of the relevant transaction is signed. This procedure requires a specific documentation package.
So, for the conclusion of the contract, the borrower provides the credit manager with the following:
- civil passport – the original and copies of the filled pages;
- certificate of income for the period specified by the bank;
- papers confirming employment;
- certificate of no outstanding criminal record.
The latter include a certified copy of the workbook. The elderly borrower, submits as proof of solvency, a certificate of the amount of the pension for a specific period.
If among the parties to the transaction are the guarantors of the return of borrowed funds, the agreement is concluded only if there is a contract of guarantee. The same applies to property guarantees – to conclude a transaction, a pledge agreement is required. When making a loan for two, the joint debtor also provides the above acts.
What if the bank entered illegal terms into the agreement
Before signing the main act, the borrower carefully examines the content. It happens that a credit institution introduces conditions into the agreement that violate the rights of the future debtor. For example, a bank specifies in the contract a ban on the repayment of borrowed funds in advance.
If the borrower finds that one clause of the agreement is against the law, then the client is entitled to either:
- point the bank to an error;
- immediately refuse to make a deal.
Lawyers advise to do the latter, because an attempt to deceive a client speaks of the unreliability of a credit institution. You should not take borrowed money in the bank, which is deceiving customers.
If the contract is already signed, but contains illegal conditions, then for cancellation, the borrower is required to go to court. In such a situation, the truth is on the side of the debtor. However, the money received from the bank, the borrower will have to return.
In the event that a section appears in the agreement, the content of which was not voiced when the act was drafted, the debtor is entitled to demand termination of the transaction. In this case, the bank also violates the law, since it issues a product on terms that it does not tell the client in full.
What to pay special attention to when concluding a contract
To avoid problems during the repayment of the loan, you need to competently approach the conclusion of the loan agreement. To do this:
- Carefully study the conditions of the program.
- Compare the terms of the offer with the content of the agreement.
In addition, the contract includes items that require detailed study. This includes sections on:
- the right to change the bank interest rates;
- violations by the debtor of the terms of the contract and the consequences thereof;
- use of collateral;
- refinancing rights.
A credit institution raises even a fixed rate, so you should carefully look to ensure that there is no corresponding condition in the agreement.
In addition, the future debtor is important to know for what and how, the bank has the right to punish for a violation. The use of the object of the target loan is also a necessary section, because if the rules are violated, the borrower loses the property or vehicle.