Lending or borrowing money has turned many a relationship sour. This is why you don’t enter into a loan agreement without a legal document to support it. It’s a good thing we’ve prepared loan agreement samples that you can easily download and fill out. Whether it’s a collateral (secured) or a non-collateral (unsecured) loan, our free sample templates will help you have legal proof to hold on to if the borrower defaults or the lender demands something that isn’t included in your original agreement. Related: Promissory Note Sample Philippines
A loan agreement is written evidence of a loan between persons or business entities (i.e., partnerships and corporations). It lays down the complete details of the loan, including the amount, terms, collateral (if it’s a secured loan), and what will happen if the loan defaults.
This is like our loan agreement bible. The Philippines’ Civil Code 1 covers all contracts’ basics, including loans. It discusses things like agreeing to the loan and why it’s happening.
Imagine you’re lending money to a friend. You both need to agree on the loan amount, when it should be paid back, and what happens if it isn’t. The Civil Code sets the ground rules for these agreements. It’s like a guidebook ensuring everyone knows and agrees on the basics.
This law sets limits on interest rates. You can’t just charge whatever you want; there are rules.
Let’s say you’re lending money to start a small business. You can’t just charge any interest rate you feel like. The Usury Law says the maximum interest rate for a secured loan is 12% per annum, while the maximum interest rate for an unsecured loan is 4% per annum 2 . So, this law makes sure lenders play fair and don’t take advantage of borrowers.
This is about honesty. Lenders must spill the beans on the loan terms so borrowers know the situation.
Say you’re borrowing money to buy a car. The lender can’t just throw a pile of papers at you and say, “Sign here.” Instead, they need to explain everything clearly. They should tell you how much the loan will cost, what the monthly payments will be, and if there are any hidden fees. This law ensures you know exactly what you’re getting into 3 .
If personal data is involved, like your name and address, this law ensures it’s protected 4 .
Let’s say you’re applying for a personal loan online, and you need to provide your details like your name, address, and maybe even your ID number. The Data Privacy Act ensures that your personal information is protected. It means the lender can’t share your info with anyone or use it for purposes other than what you agreed upon when taking the loan.
Now, let’s break down that loan agreement template we gave you:
Sure thing, but both parties must agree. It should also be in writing to keep things transparent and fair.
In a nutshell, loan agreements in the Philippines aren’t as tricky. Stick to the rules, use the template right, and you’ll be safe. If you need more clarification, talk to a lawyer.
Luisito E. Batongbakal Jr. is the founder, editor, and chief content strategist of FilipiKnow, a leading online portal for free educational, Filipino-centric content. His curiosity and passion for learning have helped millions of Filipinos around the world get access to free insightful and practical information at the touch of their fingertips. With him at the helm, FilipiKnow has won numerous awards including the Top 10 Emerging Influential Blogs 2013, the 2015 Globe Tatt Awards, and the 2015 Philippine Bloggys Awards.
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