Loan Agreement in West Virginia & Unenforceable Contracts
For the most part, the terms of loan agreements are always stacked up against the borrower, with lenders using strict terms and boilerplate languages to ensure that they get their money back in the event of a defaulted payment. And what all these mean is that you have to be smart enough to read and understand all the aspects of the fine print in details and ask for clarifications where necessary, but you will also need to negotiate the terms, while making sure that you are signing off an agreement that would be enforceable in court.
While you have the option of working with some of the best lawyers to ensure the review of the loan agreement, one of the best options for you to consider before signing the agreement is how the loan agreement is created and exactly what goes into the agreement and how that agreement works. To attain all this knowledge, first, download our free West Virginia loan agreement form online to familiarize yourself with the important provisions of the loan contract. If you are a private lender, this sample loan agreement form will give you an overview of how loan contracts are supposed to look like, while also serving as an important guide to help you come up with a comprehensive and a legally binding loan agreement in West Virginia.
The legal loan agreement sample will feature some of the most important components of a loan contract, including the names and the relationships of the parties to the relationship, the loan’s effective date or the date that the lender disburses the payment, the loan amount (including the principal amount, interest rates and fees), as well as the repayment terms/ schedule, the collateral for the loan, and the default terms governing the loan agreement. Put together, these provisions/ sections of the loan agreement give the lender legal recourse in case of a dispute or nonpayment, and the borrower will have documentation to refer to as they keep up with their payments.
But there is one catch; you might do all these yet end up with a contract that is deemed unenforceable. In this article, we’ll look at some of the things that make loan contracts unenforceable. But first, a look at the state’s usury laws.
West Virginia Usury Laws
Like all the other states, there are usury laws put up to protect the interests of consumers from unscrupulous lenders. While some people still end up paying very expensive loans because they are unaware of the state laws, you shouldn’t feign ignorance as an excuse because there you don’t always have to pay such expensive loans.
The maximum rate of interest acceptable in the state is 6%, where a written loan agreement is missing, but if there is a written contract, the maximum interest rate that lenders can charge is 8%. Lenders who break these laws will be punished – they will void their interests, and the borrower might recover up to 4 times the interest paid, at a minimum of $100. For legal judgments like child care, the state has prescribed a maximum interest rate limit of 10%.
These usury laws are not, however, applicable to life insurers, installment sales for a business, credit consumer sales, or business loans.
Now that you know all about the basics of loan contracts and the state laws on loan interests let’s take a look at some of the things that make contracts unenforceable.
Contract signed by an individual who lacks the capacity to make the decision
At the time of signing the loan contract, it is expected that the lender and the borrower have the full capacity to understand everything they are agreeing to. If it appears or if it’s later on determined that the borrower or the lender didn’t have the capacity to make that decision either because they are mentally incapacitated or because they are too young to enter into that agreement, the contract will be deemed unenforceable.
Contract signed under duress
The other reason why a contract might be deemed unenforceable is if it’s determined that the agreement was signed when one of the parties was under duress. So, if the borrower or the lender signs the contract because they are threatened or if they are coerced, the contract will be unenforceable.
At the time of signing a contract, both parties are expected to divulge all material detail that may affect the contract. If someone fails to disclose material facts that affect the contract directly, it will be deemed illegal and unenforceable.
Misinterpretation and signing the contract after undue influence is the other factors that are the basis for unenforceable contracts.
For enforceable loan contracts in Martinsburg, Morgantown, Charleston, Huntington, Wheeling, Beckley, or any other city in West Virginia, download our free loan agreement forms here to get started today.