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A loan agreement is a written contract between a borrower and a lender that outlines the repayment terms for borrowed money. It is based on the borrower's promise to repay according to a specified schedule, either through regular payments or a lump sum. Loan agreements are valuable as they legally obligate the borrower to repay the loan. Various types of loan agreements exist, such as those for business, personal, home equity, auto, and student loans. Each type serves to set the repayment terms. Other related documents include a family loan agreement, for borrowing within families, and an IOU, which is a simple acknowledgment of borrowed money without detailed repayment terms or interest rates.
