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A loan agreement is a written contract between a borrower and a lender that outlines the terms for repaying borrowed money. It is based on the borrower’s promise to repay the loan according to a set schedule, either through regular payments or a lump sum. These agreements are essential for lenders as they provide legal enforcement for repayment. There are various types of loan agreements, including those for business, personal, home equity, car, and student loans. Additionally, specific documents like family loan agreements and IOUs may be used; the latter serves as a simple acknowledgment of borrowed funds without detailed repayment terms or interest rates.
