Lending Agreements Overview

Lending agreements, also known as loan agreements, are legal contracts between borrowers and lenders. The lending agreement spells out loan details such as how much money is loaned, the rate of interest, what fees will be charged, and the length of time the borrower has to pay the money back.

If you are borrowing money, you may be asked to promise an asset—such as the mortgage for your home or other property—to secure the loan. If you fail to pay the loan, the lender has the right to take your collateral and sell it to get the money you owe. It's important to read lending agreements carefully to be sure you understand all the terms.