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Loan Agreement Letter

Loan agreement letter is a guarantee by a bank or someone with financial backing so that the bank can readily allow loan to them. The point is that bank should be convinced of the fact that the person or the institution has the financial resources to pay back. The letters of credit are in practice in spheres like international trade, where payment is rarely made on delivery.

  • The language should be simple and direct
  • Avoid ambiguous words and terminology
  • State everything in clear and concrete terms
  • Make sure both parties understand all their terms and obligations
  • As a party you should make it sure that the terms of the letter of credit are reasonable for both parties

Loan Agreement Letter Template

Use our free Loan Agreement Letter to help you get started. Simply download the .doc or pdf file and customize it. If you need additional help or more examples check out some of the sample letters below.












Date: _____ (Date on Which Letter is Written)












Subject – _______________________(Mention the purpose)

Respected _______(Name)

Hereby note that this letter is to grant 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 which is ___(mention the no. of years) and in case if the second party failed to repay the full amount within that period, the terms and conditions documented in the agreement letter will be applicable then and there.

Hope you will get back to me very early

Thanking you.


Name and signature


Download Template (Doc and PDF)

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Loan Agreement Letter Sample, Email and Example/Format


Respected Sir/Madam,

This agreement is to give a legal form to the loan taken out from the first party Mr. Radhakrishnan to the second party Mr. Ranganathan an amount of Rs 20,0000 with a monthly interest of 14%. I agree that the transaction is 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 through 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 if in any case the second party is unable to repay the amount means the first party will have the right on the gold ornaments in exact proportion to the mount due taking together the original amount and the compound interest.

If the second party has any doubt regarding this contract, he is free to contact the first party regarding clarifications.
Yours sincerely,


Thanking you,

Yours sincerely,



Email Format


Mr. Kartik Shetty,

Hiranandani Gardens,


2nd Sept, 2010.

Subject: Loan approval for the home loan request with reference number 0904210 dated 22th August’ 2010.

Respected Sir;

We feel immense pleasure to inform you that your housing loan application in relation to the subject with reference number 0904210; has been duly accepted by our Powai branch office. Having scrutinized your financial status & background; our concerned department has sanctioned your housing loan amounting to Rupees Twenty Lakhs. Further requesting to thoroughly go through the enclosed herewith the requisite terms and conditions to be considered.

As per the recent amendments; you are further notified to submit the filled forms which are also enclosed herein and also attach fresh copies of documents like address proof of citizenship, PAN card details etc.

In any case you need any assistance; you can personally visit during business hours to allow us to serve you better.

Yours Truly;

Mr. Narayan Rahate,

Branch Manager,

P.T. C. I. Bank,



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