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Loan Agreement Letter

Last Updated On July 20, 2018 By Letter Writing Leave a Comment

While most people would prefer not to have a loan from a bank, there are very few sources from which a person can gain capital for whatever activity or reason, which is certified by law and doesn’t possess the threat that one encounters when borrowing money from loan sharks. When a person applies for a loan, it is only the start of a long and often drawn-out process before the loan is finally approved by higher authorities. The banks need to serve their safety which means performing stringent background checks including health, financial status, job security and any criminal records that may be levied against the candidate.

However, once all the formalities are completed, it is necessary to inform the candidate of the approval. This is usually done using a Letter or an email. A Loan Agreement Letter is a formal business letter that is used to convey the approval regarding the person’s application. It must have a polite and courteous tone, providing the parties with all the necessary information about the remaining formalities that may need to be completed as well as conditions about the payment of the loan. The sample and template mentioned will help you write this letter.

Table of Contents

  • 1 Loan Agreement Letter Writing Tips
  • 2 Loan Agreement Letter Template
  • 3 Sample Letter
  • 4 Email Format

Loan Agreement Letter Writing Tips

  • 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.
  • Once you are done writing the letter, please recheck it for any errors that may be present.

Loan Agreement Letter Template

Use our free Loan Agreement Letter to help you get started. If you need additional help or more examples check out some of the sample letters below.

From,

__________

__________

__________

__________

Date: __________ (Date on Which Letter is Written)

To,

__________

__________

__________

__________

Respected __________ (Name),

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

Thanking you.

Yours Sincerely,

__________

(Name and signature)

Sample Letter

The following is a sample of a Loan Agreement Letter.

From,

Mr. Gurumurthy,

ABC Bank.

17 February 2016

To,

Mr. Ranganathan,

XZY Company.

Respected Sir,

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 20,00,000 with a monthly interest of 14%. I agree that the transaction is a 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 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 the second party fails to repay the amount due, then the first party will have all the right on the gold jewelry for the amount due including principal and interest.

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

Yours sincerely,

Mr. Gurumurthy

Email Format

The following is the Email format to be followed for a Loan Agreement Letter.

To: name@email.com

From: name@email.com

Subject: Loan Agreement Letter

Respected __________ (Name),

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

Thanking you.

Yours Sincerely,

__________

(Name)

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