Understanding Your Loan Agreement in Maine
How many times have you clicked I Agree to an online service agreement without really taking time to read through and understand what you are agreeing too? Have you found yourself in a situation where you struggle to make up for something or even pay a higher price for something simply because you overlooked the terms? Well, don’t you think it’s time we stopped doing that, especially where money is concerned. You might have signed away most of your privacy rights over to Google and most social media channels, but if you are applying for a credit facility online, regardless of the urgency of your financial needs, you should never take the terms or the proposal at face value, and you need to really take time to understand the terms and the conditions of the agreement before you sign or agree to anything.
The main reason for this is that banks and lenders all over the world are known to hide some of the most nefarious terms into contracts and loan agreements, and if you don’t take time to read or question some of the terms, you might end up servicing a very expensive loan, a case that could have been avoided easily if you took time out of your urgency to question important aspects of that fine print.
It’s also important to remember that in as much as the lending and borrowing money is often a game of trust, lenders will not just give you free money because your books show that you are good for it, you have to pay for their trust in you in terms of interest, which is why an understanding of the loan agreement is inevitable.
A legally binding agreement between a lender and borrower, stipulating the terms of the loan, including the loan amount, repayment/ amortization schedule, borrower’s bank account details, and how long the repayments will be spread, as well as conditions and steps to be taken in case of late payment or non-payment, this document could easily be the most important financial documents you ever sign. And whether you are planning to extend a loan to a friend, spouse, or close relative, never forget to create an enforceable loan agreement. At the very least, this agreement is important to the lender because it protects them and ensures that the borrower adheres to the terms and conditions in the agreement, as well as their pledge to repay that loan back, either in lump sum or in regular payments. The contractual document is also just as important to the borrower because the terms they’ve agreed on will be specified, and the document will also serve as a tracking feature for tracking of payments and for record-keeping.
Creating a loan agreement
To create a loan agreement in Maine or even a promissory note (used when smaller sums of money is involved and only signed by the borrower), first, you need to download the free Maine loan agreement form. While banks and other leading credit lending institutions already have their own draft agreements, you could download one of these editable sample loan agreements if planning to lend money or if you need to work on something to familiarize yourself with the lending document. Education and having the right information are two of the most powerful things in the world, and it wouldn’t hurt to know what to expect.
Keep in mind that the loan agreements could be used for real estate loans where you need to place a down payment on your home, a business loan, home/office purchases, student loans, as well as personal loans and IOUs between family and Friends
The loan agreement is also known as a loan contract, a personal/ business loan agreement, a money lending agreement, or a promissory note.
However, there are some differences between the loan contract and the promissory note, with the latter often used in smaller transactions, can be secured or an unsecured promissory note, and only has the signature of the borrower as they pledge to repay the loaned money on a certain date at an agreed rate of interest.
Important Sections in the Loan Contract
Once you’ve downloaded the loan agreement form in Maine, you’d need to enter the detail of the lender and the borrower, specify the loan amount, the effective date of the loan, the loan delivery method, and the agreed repayment structure.
Regarding the loan amount, the principal loan amount and the interest rate agreed upon must be specified. The interest rate is touchy, but an important subject and the state has put in place measures to protect borrowers.
- The state has set the maximum legal rate of interest at 6% unless it’s agreed otherwise, but there is no penalty for usurious rates. For court judgments not exceeding $30,000, the applicable rate of interest is 15%, and for anything above $30,000, the rate applied is the same as the statutory rate of interest applied to T-Bills + 4%.
- Consumer credit secured transactions, and pawnbrokers are exempted from these limitations.
Once all these sections are covered, and the parties are in agreement, the lender and the borrower sign the agreement, making it an enforceable legal document.
To create your loan agreement in Augusta, Portland, Bar Harbor, Bangor, Waterville, Lewiston, South Portland, or any other city in Maine, get our free loan agreement form here today.