What Exactly Goes into a Loan Agreement in Oregon?

If you are planning to take a loan and the application you made has been approved, and you only need to sign on the dotted lines or click I Agree, we’d recommend that you take a beat, think about what you are about to the decision you are about to make, but most importantly to review terms outlined in the fine print. In as much as you are in a hurry and you believe that the lender just did you a great favor by approving your loan application, especially because of your poor credit score, you need to remember that the lender always looks after themselves, and though the approval might seem surreal, some of the terms incorporated into the fine print might be quite prohibitive. We have all seen people lose their companies and assets because of loans, and if asked, these individuals would tell you all about their regrets around not signing the fine print. You don’t want this to happen to you too, which is why we recommend that you go through every bit of the draft loan contract to make sure that you understand what it means and implications of things like late payments or even prepayments.

Remember that a loan agreement is a legally binding instrument, and once it has your signature, it means that you agree to the conditions of the agreement, and even the boilerplate terms that you were not aware of. Essentially, a signed loan agreement is an enforceable contract, and there might be very few circumstances where you can refute and challenge the contract. So, for your protection, go through the terms and conditions specified in the personal or business loan agreement and challenge the provisions of the contract before you sign it.

One way of doing this is by downloading the free Oregon loan agreement form online. This legal loan agreement template will give you a sense of all the standard provisions in the formal agreement, with the clauses in the template meant to highlight the general terms of the agreement while also giving you the chance to familiarize yourself with the terms and jargon used by lenders. If you find the terms of the agreement to be too complex, you could hire a legal expert to review the terms and even negotiate for better terms for you.

Besides downloading the loan agreement in Oregon template, the other thing you could do to protect your interests and finances is by learning more about the state requirements regarding interest rates. While you get to negotiate the interest rates charged by your lender, the lender will still work out ways of maintaining an edge over you, which means that the knowledge of the acceptable state limits will go a long way in protecting your interests.

Oregon’s Usury Laws

According to the state laws in Oregon, the maximum legal interest rate for lenders is 9%, unless you have a different kind of agreement, on paper. Lenders who commit usury will be penalized through the forfeiture of all the interest on the loan, with the borrower only expected to repay the loan’s principal amount.

Regarding the interest rates charged for court judgments, the interest rate charged is 9% unless the contract has a different rate specified, where the written rate will be used.

These usury laws are not, however, applicable to loans not exceeding $50,000, agricultural and business loans, or loans by trust companies and financial institutions, as well as licensed pawnbrokers, securities, lenders approved in the National Housing Act, or commercial paper. The exception also applies to brokerage dealers who are registered under the state’s Securities Exchange.

Here, it would be a good idea to check the type of loan that you will be paying.

What Goes into The Loan Agreement?

The Loan Amount: this is the full value of the loan from the lender. It represents the loan’s principal amount and the interest rate. Confirm these numbers before signing the approved loan application.

APR - In addition to knowing the statutory limits on interest rates, check the APR provided by the lender because this number affects your payment schedule by determining the projected cost of the loan each year. It also includes the interest rates and the fees charged. Bear in mind that even the smallest differences in APRs would cost you a lot later.

Prepayment penalties – will the lender charge a prepayment penalty if you pay off the loan within the specified duration? Often, this penalty is charged as a percentage of the loan balance you are paying off, and the number won’t be as small or negligible as you’d like. So, if the prepayment penalty charged is too steep, or if there at all, negotiate the terms and ask the lender to strip off the penalty. You can find a different lender if this penalty rate is too high, hence the need to review all the terms of your agreement before you sign off on loan.

Penalty Charges – This is the amount of money that you will be paying, in addition, the interest and principal amount in case you default or make the loan payments late. Note that this amount varies from one lender to the other, but you always know the amount ahead of time.

Collateral - Which of your assets are you putting on the line as security for the loan? Your home, business/ personal assets, stocks, or control over your company might be some of the things the lender accepts as collateral. Whatever you put as collateral, be sure that you understand the implications of your decision in the future.

Finally, the agreement will have a section that specifies the responsibilities of the lender and the borrower, as well as guarantors and co-signers, if any.

To get started with the loan application and negotiation processes in Eugene, Salem, Portland, Oregon City, Medford, Bend, Beaverton, or any other city in Oregon, download our free loan agreement form here.