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This lending contract must include several key provisions:

Variable Rate – When the interest rate is tied to a third-party such as the current Fed Funds Rate.

Although, if the borrower does not pay their personal assets may still be confiscated legally.

Unsecured– The borrower is not required to place collateral as part of the loan agreement.

Often the collateral is a vehicle or a 2nd mortgage put on a home.

Secured– The borrower is required to put collateral down in case of default.

Fixed-Rate – The interest rate remains the same during the course of the repayment period.

Co-Sign – When the borrower has bad or no credit and needs someone else to be liable in case they do not pay.The lender may be a bank, financial institution, or an individual – the loan agreement will be legally binding in either case. Interest is the cost of a loan and is calculated annually. The borrower will be responsible for paying the lender back plus interest. Table of ContentsĪ personal loan is a sum of money borrowed by an individual that may be used for any purpose.

State Usury Rates – The maximum interest rate allowed in a state.