We know that many borrowers do not care very much about reading the loan agreement particularly carefully. Often you just check that the loan amount, maturity and interest rate are correct, then you sign. And then maybe there will come a day when you are forced to make a payment a few weeks late and then you are surprised by the high delay fees and the interest rate. So they can’t do this? you think, but then you check the loan agreement a little more carefully and then you see that they can certainly do.
This is just one example of why it might be good to read through the loan agreement. Another example is that you invoke the fourteen-day right of withdrawal one or two days late because you thought it started to apply only when you first got your loan, not when you signed your loan agreement.
This should include a loan agreement
Now we at Good Credit will show you what should be included in all loan agreements so you can get a better picture of what it contains for important information.
Everyone who takes out a loan, whether it is a sms loan or any other loan, has the right to get a copy of the loan agreement, either in paper form or in digital format, for example as a PDF file. You also have the right to receive advance information before you sign an agreement.
This should include a loan agreement
Info about what kind of credit it is. Is it an account credit, a bank loan (unsecured loan) or a loan that requires security?
How much loan amount (in case of a loan) or credit limit (in case of credit for credit) is all about.
The maturity must also be clearly stated. When it comes to account credit, it must state what repayment requirements apply, which is usually the same as showing how much you have to pay back at least every month. Often this is about a certain percentage of the amount spent that does not fall below a certain amount. Example: Pay at least 10% of the amount used each month but never less than USD 300 / month.
The size of your installments must be clearly stated in a payment plan, as well as how many installments are involved and when they will be paid.
If you have the opportunity to receive one or more installment-free months, it should be stated, as well as information about what it means in practice in terms of loan cost and maturity.
Information on the loan’s interest rate, ie the nominal interest rate (annual interest rate) and the effective interest rate. It must also be stated if the interest rate is fixed or variable. In the case of sms and fast loans, the interest rate is usually fixed, which means that it does not change during the term, while ordinary private loans often have variable interest rates. If the interest rate is variable, it must be stated how it can be changed in relation to the reference rate and when this can be done. It must also be stated under which conditions the interest rate can be changed.
Information about the fees the loan has, such as the set-up fee, the installment fee, interest on late payment and delay fees and reminder fees. It must also state what conditions must be met for any change in the fees.
The total amount you have to repay must also be included in the loan agreement, ie all the loan costs plus what you have borrowed.
If someone has taken out a loan for you
Information about the right of withdrawal for the loan and villa conditions must be met in order for you to avail of it. In short, you can say that the right of withdrawal is valid for 14 days from the day you sign your loan agreement (not from the moment you got your loan) and then you have 30 days to repay everything. Of course, you get to pay interest for the period you have access to the loan but all other fees you have paid you get back.
You always have the right to redeem your loan early and this should be stated in the loan agreement. If the lender is entitled to interest rate differential compensation, it should be stated how it is calculated, but this is most common for mortgages, not for loans without collateral.
Information about the conditions under which the lender is entitled to terminate your loan, for example, if you failed to repay your repayments on several occasions. The conditions for termination are statutory and cannot be done in any case. Please read about what applies in our article about when a lender can terminate your loan.