Here is a collection of free Consumer Loan Agreement Templates to help our visitors in preparing their own agreement. When a bank or a financing company issues loan to an individual for personal purposes i.e. shopping most of the time, they call it a consumer loan. This loan can be secured or unsecured but most of the time, the consumer loan is unsecured. The bank or the financing company just evaluates the worth of the debtor. And analyzes his credit habits to see if he qualifies for the loan or not. This means that most of the consumer loans don’t include or require collateral or guaranty of personal property or possessions. When a bank gives loan to a consumer, they both enter in a contract known as consumer loan agreement.
Brief description of Consumer Loan Agreement:
There are many situations in which a consumer needs big amount of money on urgent basis. If he can’t arrange it in such short period of time. He either has to sell his property or get a loan from the bank or loan firm. Usually the second option is better because once you get back on your feet. You can return the loan to the bank. This also means that you don’t need to sell any of your property or personal possessions in order to arrange for the finances. In this situation when a bank gives loan to an individual based only on his credit habits and reputation. It is very important for the creditor to make sure that this won’t go as bad debt and the debtor will return the loan.
Consumer loan agreement is very important in this process as with this agreement, the consumer who is getting the loan agrees that he has borrowed money from the bank with a specific interest rate and he is willing to return the loan in the specified period of time according to the agreement. This agreement benefits both the creditor and debtor. The creditor can secure his credit with this agreement where the debtor can also make sure that before the loan date expires, he is not asked to return the loan and also the creditor doesn’t increase the interest rate without wrongfully.
Difference between Business and Consumer Loan:
Many people make the mistake by assuming that a consumer and business loan is the same thing where in reality, there is a huge difference in these types of loans. For example, a business loan is usually way more than the personal or consumer loan. Businesses and companies require giving guaranty for their loans i.e. collateral in form of real estate property or investments but the consumers aren’t asked to provide such insurance and the creditor just evaluates the credit habits of the debtor in the past.
In the same manner, as a consumer, you can just introduce one of your friends as insurer if the bank requires it and it doesn’t matter what your friend is worth but in business loans, it is really important that the guarantor or insurer has enough worth so that he can return the loan in case the actual debtor goes bankrupt.
Free Consumer Loan Agreement Templates
Here is preview of a Free Sample Consumer Loan Agreement Template created using MS Word,
Here is download link for above shown Consumer Loan Agreement Template,