Loan Agreement Alabama: Everything You Need to Know About Loan Interest Rates in Alabama
Whether you are getting a loan contract drawn up for your home, car, or for any other reason within the state of Alabama, it’s important for you to understand the terms of the agreement, the actual interest rates charged, and everything else that you need to ensure that the terms are as favorable and possible. It means shopping around for the best rates and going through the fine print over and over again alone and with the help of a lawyer. But along with finding legal help, you also need the help of a free Alabama loan agreement.
A loan agreement, also called a loan contract, a business loan agreement, or a promissory note refers to a document created between a borrower and the lender with all the details of the loan repayment schedule. The agreement is applicable for use in personal loans, business loans, real estate purchase loans, mortgage/ car loan down payments, personal loans, and student loans, among others.
The loan agreement is an important part of financial transactions, and whether you are looking for a loan for business or personal reasons, this document ensures a high degree of financial protection. As a lender, this agreement will legally enforce the borrower’s promise to repay the loan either in lumpsum or in regular installment payments. The agreement is also important for borrowers because it spells out the details of the loan from the borrower, and it ensures that you have all your records. Having this contract in hand also makes it easy to track payments.
Before we breakdown the details of loan agreements in details, it’s worth noting that the loan agreement and the promissory notes, though similar, have some differences which include the fact that the agreement comes with a more thorough/ comprehensive schedule of the payments while the promissory note is often used for the simple loans. The promissory note would only need one signature (the borrower’s), but the loan agreement must have both the signatures of the borrower and the lender. So,
Loan Interest Laws
One of the most important elements of your free loan agreement in Alabama is the interest rates. The other elements you need to consider include the agreed payment method, loan amount, repayment schedule, collateral, as well as the details of the lender and the borrower.
Interest Rates in Alabama
The reason for this is that if you are looking for the best deal on your loan, you will come across tens of ads on the best rates and most of them claim to offer the best deals to help lower your debt by offering the best rates, but the truth is that after some time, you will find that the promotional interest rates though seemingly low, are often lower than the actual rates you’d find. With this in mind, you need to make sure that you know what the best rates on the market are. So, which are the standard rates, how much is too much when it comes to loans interest rates?
Interest Rates and Usury
According to the Alabama Code Title 8 for Commercial Law and Consumer Protection, Chapter 8 – covers Interest and Usury, the legal maximum rate of interest that should be agreed upon in writing is not more than 8% annually. But for agreements not put in writing, the maximum interest rate that could be applied to a loan is 6%.
The penalty for unlawful interest rates/ Usury – if anyone is found to charge more than the acceptable statutory rates, the state notes that the contract will not be enforceable, and the borrower will have to pay the principal that was originally agreed on. And if you already paid some of the interest, you will be allowed to deduct the interest from the principal already paid.
But the state recognizes something called Holder In Due Course – what this means is that in cases where usury is used as a defense to paying debt, the law against usury cannot be claimed. Holder in Due Course essentially means that the person who purchased the debt and also was assigned the rights to be receiving the debt payments for all kinds of negotiable instruments.
Interest Rates Applicable to Legal Judgments
Besides legal costs, interest rate applicable to money judgments is 12%. If your judgment is based on contracts, the applicable interest rate will be the rate that’s actually based on the interest rate that’s stated on the contract from the breach of contract and the cause of action.
On the other hand, all the legal judgments that are based on actions like the fees allowed to trustees, attorneys, and estate administrators bear an interest rate of 12% right from the date of the entry of judgment.
For past-due child support, the interest charged is 7.5%. This was effected from first September 2011.
The only exceptions to these laws on interest rates include interests applicable to:
Loans more than $2000
Debts that are under the National Housing Act
Industrial and medical boards
Bonds to non-profits and public organizations
Public housing bonds
Some public hospital corporations
State education securities
Once you agree on the terms of the agreement, ensures that the parties to the agreement sign off on it.
To get started with your loan agreement documents in Mobile, Birmingham, Huntsville, Montgomery, Auburn, Dothan, Tuscaloosa, or any other city in Alabama, download our loan agreement forms here today.