When entering into a financial agreement with a lender or borrower, it`s important to have a formal repayment agreement in place. A repayment agreement outlines the terms of repayment, including the amount borrowed, the interest rate, the repayment schedule, and any penalties for late payments.
To help you get started, here is a sample repayment agreement that can be customized to fit your specific needs:
Repayment Agreement
This agreement is made on [date] between [lender name] (hereafter referred to as “Lender”) and [borrower name] (hereafter referred to as “Borrower”).
1. Loan Amount: The Lender agrees to loan the Borrower [loan amount] to be repaid according to the terms outlined in this agreement.
2. Interest Rate: The loan will accrue interest at a rate of [interest rate] per year.
3. Repayment Schedule: The Borrower agrees to repay the loan in [number of payments] equal installments of [amount of each payment], with the first payment due on [date]. Payments will be due on the [day of the week] of each week/month until the loan is fully repaid.
4. Late Payment Penalty: If any payment is not received on or before the due date, a late fee of [late fee amount] will be charged to the Borrower.
5. Prepayment: The Borrower may prepay the loan in full at any time without penalty.
6. Default: If the Borrower fails to make a payment on or before the due date and has not cured the payment default within [grace period] days, the loan will be considered in default and the Lender may pursue legal action to recover the amount owed, including interest and penalties.
7. Governing Law: This agreement will be governed by the laws of [state or country].
8. Severability: If any provision of this agreement is found to be invalid or unenforceable, the remaining provisions will remain in full force and effect.
9. Entire Agreement: This agreement constitutes the entire understanding between the parties and supersedes all prior negotiations and agreements, both written and oral.
By signing below, the parties acknowledge that they have read and understand the terms of this agreement and agree to be bound by them.
Lender: [Lender signature]
Borrower: [Borrower signature]
This sample repayment agreement is just one example of the many ways that such an agreement can be structured. It`s important to work with a legal professional to ensure that your agreement is tailored to your specific needs and complies with all applicable laws and regulations.
Having a formal repayment agreement in place can provide peace of mind for both the lender and the borrower. By clearly outlining the terms of the loan, including the repayment schedule and any penalties for late payments, both parties can avoid misunderstandings and potential disputes.