Even while most people would rather avoid a bank loan, there are few sources from which one may get funds for any activity or purpose, which are approved by law and do not carry the fear of loan sharks.
Getting a loan is only the beginning of a lengthy and sometimes frustrating process that may take months or even years to complete. All of these factors need to be thoroughly vetted by banks in order to ensure the safety and security of the customers they are entrusted to serve.
The applicant must be notified of the approval after the processes are complete. In most cases, this is done through letter or email.
It is a formal business letter that conveys the acceptance of a person’s loan application in the form of the Loan Agreement Letter.
In order to avoid any confusion, the letter should be written in a courteous and respectful manner, outlining all of the details of the loan agreement, including the terms and circumstances of repayment.
You may use the examples and templates provided to help you draft this letter.
Tip For Writing a Loan Agreement Letter
- Simple and plain language should be used throughout the document.
- Whenever possible, steer clear of unclear vocabulary and expressions.
- Everything should be laid forth in simple words.
- Make sure that both parties are clear on all of their responsibilities and terms of service.
- Please double-check your letter for any mistakes when you’ve finished writing it.
Template for Loan Agreement Letter
Get started by downloading our free Loan Agreement Letter. If you’re still stuck, you may refer to the samples towards the bottom of the page for guidance.
From, __________ __________ __________ __________ Date: __________ (Date on Which Letter is Written) To, __________ __________ __________ __________ Respected __________ (Name), Hereby note that this letter is to grant your loan from my institution to the second party on gold remittance as security to the tune of Rs __________ (mention the cost) with a monthly interest of __________ (mention the percentage) to the amount. The repayment period for the loan is __________ (mention the no. of years) and in case if the second party fails to repay the full amount within that period, the terms and conditions documented in the agreement letter would be applicable then and there. Thanking you. Yours Sincerely, __________ (Name and signature)
An example of a loan agreement letter is shown below.
From, Mr. Robin Roy, ABC Bank. 17 February 2016 To, Mr. James Johnson, Sachtech Company. Respected Sir, This agreement is to give a legal form to the loan taken out from the first party Mr. Radhakrishnan to the second party Mr. James Johnson an amount of Rs 20,00,000 with a monthly interest of 14%. I agree that the transaction is a part of the party taking money from my private bank on the security of gold of 2 kgs worth. As per the agreement, the second party will remit the interest regularly at my office either through cash cheque or liquid cash. The loan as per the agreement has the repayment time of 5 years and after which compound interest will be levied on the second party for the amount already taken. In case the second party fails to repay the amount due, then the first party will have all the right on the gold jewelry for the amount due including principal and interest. If the second party has any doubt regarding this contract, he is free to contact the first party regarding clarifications. Yours sincerely, Mr. Robin Roy
Also See: Letter Of Understanding & Agreement
The format for an email including a letter of agreement to lend money is as follows.
To: firstname.lastname@example.org From: email@example.com Subject: Loan Agreement Letter Respected __________ (Name), Hereby note that this letter is to grant your loan from my institution to the second party on gold remittance as security to the tune of Rs __________ (mention the cost) with a monthly interest of __________ (mention the percentage) to the amount. The repayment period for the loan is __________ (mention the no. of years), and in case if the second party fails to repay the full amount within that period, the terms and conditions documented in the agreement letter will be applicable then and there. Thanking you. Yours Sincerely, __________ (Name)