Personal Loan Agreement Characteristics

Loads of times persons take personal loans from banks or other financial institutions. Such loans can be taken for various purposes such as marriage, travel or due to any other urgent need of money. Before taking the loan, the individuals need to sign a personal loan agreement with the banks. Such a personal loan agreement specifies various terms and conditions regarding the use of such money and its repayment by the individual.

A personal loan agreement specify the loan amount, interest rate and the duration in which the borrower is required to pay back the amount to the bank. Most of the banks charge a certain amount of fees towards the legal charges, file charges etc which is deducted at the source itself. It would specify the amount of monthly installments, known as the EMI that the individual is required to pay without fail. Along with this, the date by which the amount needs to be paid by the bank is specified in the agreement as well.

Most of the time, the repayment of the personal loan is done with the help of ECS (Electronic Clearing System) and PDC (Post Dated Cheques). This means that the borrower would give post dated cheques to the bank and the repayment amount would be debited automatically from his or her account. The agreement would specify the amount that would be charged from the borrower in case the cheque is dishonored due to any reason.

Further, if any dispute arises between the borrower and the bank due to any possible reason, the borrower would still be required to make the mandatory payments. This would be specified clearly in the agreement. It would also specify that the bank would initiate the necessary legal proceedings, if required, in which court of the law. The agreement would also specify the purposes which the loan amount cannot be used. In case the borrower is found doing so, the bank is entitled to take necessary legal action.