Loan agreement and loan agreement. Discover the main differences

It can be said that both a loan and a loan agreement are the most important elements of a financial liability. It protects all rights of the borrower and protects him against abuse. That is why it is so important to know both types of contracts from the inside out, know their most important components and thoroughly understand the provisions contained therein.

What is the loan form?

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The online loan agreement is a private agreement, regulated primarily by the provisions of the Civil Code, in particular by art. 720. According to the law, a loan agreement is a document stating that a given sum of money or things has been transferred to the other person’s property, and that person undertakes to return that money or item in the same amount, sometimes for an additional fee.

The interest rate on the loan is not obligatory and can be set by agreement of the parties. Interestingly, the loan agreement can also be concluded for an indefinite period, although this is never practiced for online loans. The loan can be granted by both a private person and a legal person, such as a company which is a company, for example. If we decide to take a loan from a friend or family, we do not even have to write down such a contract if the loan amount does not exceed USD 1,000.

What does the law say about the loan agreement?

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The loan agreement is above all more complicated and regulated by other regulations. The applicable law to which you must refer when constructing a loan agreement is banking law. Article 69 of that law states:

Through the loan agreement, the bank undertakes to make available to the borrower for the period of time specified in the agreement the amount of cash intended for a specified purpose, and the borrower undertakes to use it under the conditions specified in the agreement, return the amount of the loan used together with interest on the specified repayment dates and payment of commission on the loan granted.

How is the loan agreement constructed?

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Any loan agreement, regardless of the amount committed, must be in writing. The loan agreement is also regulated by the Consumer Credit Act of 2011. It defines all rights and obligations for both borrowers and lenders, so most of the elements in both the loan agreement and loan agreement will be identical. Especially those regarding the costs of granting financing and the borrower’s rights resulting from the information obligation specified in the Act, as well as the rules for accepting and examining complaints.

Banks also grant loans, but in their case the contract will look almost the same as a loan agreement, including the interest rate, which according to the law must be applied in the same way as for a loan. The only exception will be the lack of a record about the purpose of allocating money.