Loan Servicing Agreement
A loan servicing agreement is a document that is drafted in order to record the process in which the loan will be administered when a lender provides a loan to the borrower. The details usually stated in a loan servicing agreement includes the mode of payment of the loan, the monthly installment required to be paid, payment of taxes and insurance and maintenance of payment and balance records. The agreement guarantees that the borrower and the lender agree to the loan servicing process.
Sample Loan Servicing Agreement
This loan servicing agreement has been made and entered on8th of July 2011 between MM Finance Limited referred to as the lender and Steve Finn referred to as the borrower.
As per the agreement, the borrower has taken a loan of a principal amount of $300000 from the lender. As per this agreement the borrower agrees to enter into a loan servicing agreement with the lender for the administration of the loan.
The terms and conditions that both the parties need to agree are as follows:
- Loan payment mode: The borrower agrees to pay an equal monthly installment to the lender in order to repay the loan. The installment will be deducted on the 1st of every month from the salary account of the borrower.
- Loan interest: The loan interest rate of 8% will be included in the equal monthly installment.
- Insufficient funds: In case there are insufficient funds in the salary account of the borrower to pay the loan installment, the borrower will be charged a fine of $500.
- Bankruptcy: If the borrower declares bankruptcy, the lender will get the proceeds from the sale of assets of the borrower.
- Termination: The loan servicing agreement can be terminated only after the borrower has paid the principal amount in full.
Signature of the borrower: ______________
Signature of the Lender: _______________________
Category: Loan Agreements