Loan Agreement in Utah: Negotiable Provisions
A loan agreement represents a legally binding contract that specifies the terms for a loan agreement while also specifying the rights, responsibilities, and obligations of the parties to the agreement. Using the loan agreement, which is also called a loan contract or a business loan agreement, this loan contract is important as it spells out the details of the loan for the borrower’s record and the for tracking of their repayments. On the other hand, the loan contract is important to lenders because it allows the lender to enforce the pledges made by ta borrower to repay the loan in the agreed/ promised time frame. You could use the loan agreement to process student loans, business loans, real estate loans, as well as personal loans and credit purchases.
If you are planning to take on a loan, one of the most important steps you need to take into consideration is the free Utah loan agreement form. The loan agreement sample form comes in extremely handy because it means that you would be able to review all the terms and the provisions of the loan contract before you sign the agreement, allowing you to negotiate for fairer terms.
Some of the important sections of the loan agreement include sections including the total loan amount, the interest rate, repayment schedule/ plans, collateral, and the default terms, among others. One of the most important and sections for your consideration has to do with the interest rates. While lenders often make the rules regarding the interest rates, they are often guided by state usury laws. The loan agreement in Utah will have the interest rates specified before you sign off on the loan agreement, you need to know that the state has capped the interest rates charged at a maximum of 10% for loans with no written contract unless parties agree on a different rate of interest. Lender found guilty of contravening these laws will be penalized and charged in the criminal courts with a Felony in the 3rd degree. In the case of legal judgments, the interest rate charged will be the rate applied on the 1st of January that year, and an additional 2% in the absence of written contracts. These laws do not, however, apply to political subdivisions.
Now that we have the basics out of the way let’s look at some of the negotiable elements of law agreements in Utah. Keep in mind that in as much as you are able to negotiate the terms of the agreement, the terms will always be in favor of the lender, but the negotiation allows you to work out the boilerplate terms and even to understand more about the terms provided for in the contract. Note that if you don’t understand the words or the language used in the loan contract, you should consider professional advice from legal counsel.
Negotiating Loan Contracts
Interest rates and the repayment terms
You might only be concerned with the loan amounts and whether you will get the full amount of money applied for, but you also need to check and review the interest rate, as well as the repayment terms. Negotiating the repayment schedule and interest rate will depend on and be guided by factors such as your financial capability, bargaining power, and our revenue projections. At the end of the day, you need to negotiate the terms these terms, making sure that you sign off on the agreement when you are certain that the terms are flexible enough, especially because you don’t want to default the payments.
Default Terms and How to Avoid Defaults
Lenders incorporate a number of boilerplate terms into this section of the agreement, which means that you must review the aspects of the loan’s terms for default to make sure that you won’t lose your home after the first missed payment. Since a breach of contract might affect our business or your personal finances significantly, knowing what you are getting yourself into is a great idea.
Check if the agreement comes with restrictive terms, for example, you having to provide financial statements before making an important move. You need to work on softening the terms of default.
Some of the strategies that you could implement in the default section include the incorporation of the maximum and minimum dollar limits, the addition of materiality or knowledge qualifiers, incorporation of cure periods in case of breaches, or the insistence on the cessation of ramifications and penalties for underlying waived/ cured defaults.
Before you put up property as collateral, you need to be certain that you would be willing to give up the named asset in case you default. While lenders look for options that would be easy to liquidate or manage, it doesn’t mean that you should put up your majority stakes in your company.
To get started with loan contracts in Ogden, Provo, Salt Lake City, St. George, Park City, Logan, Moab, Orem, or any other city in Utah, download our free loan agreement forms here.