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a loan agreement is a written agreement between a borrower and lender that stipulates terms to recoup lent money the foundation of a loan agreement is the borrower's promise to pay back the loan in line with an agreed-upon repayment schedule with regular payments or a lump sum as a lender a loan agreement is very useful as it legally enforces the borrower to repay the loan types of loan agreements a normal loan agreement is useful for many situations such as business personal home equity car and student loans loan agreements can come in many variations but the function of each type is to set up the terms to pay back money owed these are other types of loan agreements and related documents family loan agreement for the borrowing of money from one family member to another IOU the acceptance and confirmation of money that has been borrowed from one party to another this is a simple form that doesn't commonly give details about how or when money will be paid back or any interest rate payment penalties etc loan personal guarantee if someone does not have sufficient credit to borrow money this form allows someone else to be liable if the debt is not paid personal loan agreement for most loans from individual to individual release of debt after a note has been paid in full a document should be issued as proof that the borrower has satisfied their debt release of personal guarantee freeze a guarantor from responsibility secured promissory note a loan agreement that lists assets are to be handed to the lender if the payment is not made in ance with the form unsecured promissory note similar to a standard loan agreement an unsecured note lists of promise to pay with dates and interest rate and penalties if any secured loans versus unsecured loans standard loan agreements are either secured or unsecured and this factor is usually dependent upon the borrower's credit score secured loan the term secured means the borrower must put up collateral such as a home or a car in case the loan is not repaid therefore the lender is guaranteed to obtain an asset of the borrower in the event that they are not paid back usually a lender will want to secure a loan if the individual has a credit score of less than 700 unsecured loan does not require the borrower to provide collateral typically for individuals with higher credit scores 700 and above writing the loan agreement the common structure for a loan agreement is as follows loan amount borrower and lender payment structure interest expenses governing law signatures Ussery laws by state a usury rate is the maximum rate of interest a lender can charge it's very important that lenders do not charge a rate that is higher than what their state allows if the interest rate is higher than the maximum allowed the loan is considered null and void and is unenforceable and in some cases much more than the state specific rate could prompt federal prosecution before entering into a loan agreement be sure to verify your state's Ussery rate