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Last revision: 12/30/2023
Available formats: Word and PDF
Size: 4 to 5 pages
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A Loan Agreement is written evidence of a loan between individual persons or entities, such as partnerships and corporations. It contains the amount of the debt and the terms and conditions of the loan. In this loan agreement, the person or entity lending the money will be called the creditor while the person or entity borrowing the money will be called the debtor.
Some conditions in the loan that may be included are:
Immovable property as security
How to use this document
This Agreement sets out all the terms and conditions of the loan including the personal details of the creditor and the debtor (such as their names, nationalities, civil status, and address), the amount of money being borrowed, and the manner of payment of the loan, and the signature of the parties. If a representative will sign for any of the parties, the representative must present a Special Power of Attorney to enter into the Loan Agreement on behalf of said party.
If there is more than one creditor or debtor:
the full amount of the loan - The creditor who receives the full amount shall be liable to repay the other creditors the amounts that they lent to the debtor.
If there is more than one debtor, the user must also choose whether the creditor can demand the debtor to pay:
the full amount of the loan - The debtor who pays the full amount can ask the other debtors to repay him for their specific portion.
The user can choose whether the payment of the loan will be in a lump sum (the whole amount and interest to be paid on one date) or in installments. If the user chooses installment payments, the user can choose whether the installments will be paid in equal amounts until the full amount is paid or equal amounts with a lump sum at the end (e.g. 80% will be in equal installments and the last 20% will be paid in lump sum).
If the loan is secured, as discussed above, the document also includes an Affidavit of Good Faith, which the parties will also have to sign in the presence of a notary public, and an Acknowledgment and Certification of Oath for the notary public.
If the loan is not secured, the user has the option to include an Acknowledgment in order to convert the document into a public document. If a document is a public document, it becomes self-authenticating and requires no further authentication to be presented in court as evidence.
Once completed, the document should be printed for each creditor and debtor (one copy for each party). The parties must review the document carefully and sign the same. If the document will be notarized, the parties must personally go before a notary public with competent proof of identification and acknowledge the loan agreement. If the document includes an Affidavit of Good Faith, the parties must sign the same in front of the notary public.
There are a number of special laws that affect loan agreements, however, general law for loan agreements can be found in the Civil Code of the Philippines. Additionally, to properly secure a loan agreement by Personal Property, the provision of the R.A. 11057 or the Personal Property Security Act should be complied with.
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