Carl Glendon

What are the Types of Loan Agreement Contracts?

A form for loan agreementmay be of two types.

Secured Agreement

A Secured Loan is issued as well as supported along with collateral, for use if no payment can be made any more by the borrower. The term "collateral" generally refers to some physical asset which may be sold off and / or seized by the lender for paying back the rest of the loan balance. The collateral may be bonds, stocks, house or car.

In case the personal loan agreement contract does not have a clause for collateral, the lender needs to approach the court and make an appeal to have the borrower's assets seized. When a clause is there in place, there might still be a need for the lender to approach the court for seizing on the collateral. However, the process runs in a smoother manner.

Unsecured Agreement

An unsecured loan is a type of loan which is issued minus any collateral. Such types of loans are commoner while loaning money to family members or friends, and involve the use of a personal loan agreement template. The interest rates for this kind of a loan might be higher, and can offset lender's risks for lending money in the absence of collateral. It is important to prepare the loan agreement format for such kind of a loan in a proper way, keeping all the important factors in consideration.

Can be used for multiple purposes

It is a fact that such kind of a form for loan agreement may be used for varied purposes, such as for getting:

• Business Loans
• Real Estate Loans
• Student Loans
• Car Loans
• Personal Loans

The simple loan agreement template structure remains the same, regardless of the purpose that the loan is taken for.

Author Resource:-

Carl writes often about legal drafting of rental & commercial lease agreements, loan agreement and bill of sale to help the people in needs. Please visit this site to ??get Alabama power of attorney form.