Loan Agreement in Idaho – Things to Consider Before Signing Idaho Loan Contracts

A loan agreement refers to a legally binding contract drawn between a lender and a borrower, and it details all the important details of the loaned money, including the loan repayment schedule. The loan agreement in Idaho is quite comprehensive, unlike the promissory notes. So, in as much as the loan agreement/ loan contract, and the promissory notes represent pretty much the same thing, you’d be better off using a promissory note when loaning a small amount of money to a friend or family – unlike the loan contract/ agreement, the promissory note is only enforceable with the borrower’s signature. Therefore, as the name suggests, a promissory note is a legally binding document in which a borrower promises to pay back the money lent on the agreed date. Given the comprehensive design of this loan agreement, a lot of details might be lost in the fine print, and that means that a borrower should never be in a rush to sign the document. Regardless of the urgency of the loan, go through all the sections of the fine print or have your lawyers go through everything to ensure that all the terms incorporated in the agreement are favorable and also to ensure the protection of your financial interests.

To ensure that you get started on the right foot, one of the first things you need to do is to your editable copy of the free Idaho loan agreement form. This free loan agreement form gives you an idea of what you should sign off on and what you should reconsider.

Before we look at some of the important considerations you should have in mind, it’s worth noting that the loan contract is essential for the protection of the lender because it allows for the enforcement of the borrower’s binding pledge to repay the loan as per the agreement they’ve signed off on. The agreement is also important for the borrower for record-keeping and tracking of payments.

• • Repayment Schedule

    The first draft of the loan agreement that is issued by the lender will have all the details of the loan, including the loan amount, applied interest rate, how you will pay, and expected balances after each payment (for regular payment). It’s also called an amortization schedule, and it simply breaks down the loan’s repayment structure to zero. In this schedule, the payment option is either on a fixed date basis or as a repayment notice/ demand. Before the final schedule is drawn up, negotiate these terms to make sure that the terms in the agreement are favorable and won’t impact you negatively.

  • Interest Rates

    In addition to specifying how much you will be paying after what time, your agreement must specify the loan’s interest rates. Essentially, the rate of interest charged by the lenders is dictated by the statutes, although there are several exceptions that you must be aware of. Being aware of the state limits is also important because it protects you from exploitation by lenders. The state stipulates that the maximum legal interest rate charged on loans should be 12% unless there is an express contract. The exception to the 12% rule applies to money lent, money that is due as a result of an express contract, money loaned that has become due, money due form the settlement of the mutual account, money that’s received to be used by someone else and is retained beyond a reasonable time without the implied or express consent of the owner.

    For legal judgments, the interest rate applicable is 5.125% along with an annual average yield on the US Treasury Securities, as determined by the state treasurer. In the event of a usurious interest rate charged, the plaintiff might recover the full amount from the injury.

  • Payment Method

    In this section, you need to specify whether you will make the repayment in cash, check, wire transfer, or in any other way.

  • Collateral

    What are you giving as security for the loan? Can you afford to lose the item named as security, if you are unable to repay the loan on time?
    Before you make a pledge for collateral, you need to remember that the lender will have more confidence lending you that money if the collateral you pledge is a reasonable bargain for them. Lenders are always looking for ways of protecting themselves, but you need to be careful not to pledge your home or anything else that you cannot afford to lose. Go through your options and pledge security when you are certain that you will be able to repay the loan within the agreed period.

  • Default

    It’s also important to consider the default terms and whether you can make those terms favorable. Inclusion of cure periods for breaches, the addition of materiality qualifiers, and making sure that the default terms insist on the cessation of penalties after an underlying default has been either waived or cured.

If you are planning to use a loan agreement in Idaho, Twin Falls, Boise, Idaho Falls, Meridian, Nampa, Pocatello, or any other city in Idaho, our free loan agreement form will help you get started.