A simple loan agreement is written to protect the rights of both the creditor and debtor. It can be either handwritten or type-written, as long as the content is legible for both parties to read. Since the verbal agreement has been made, and while some others think that a verbal agreement is the only thing that is needed, you need a formal form of writing to make it even more valid. It can serve as a proof and a legal document that needs to be followed, with certain penalties depending on what is written in the agreement.

Writing a simple loan agreement sounds like a daunting task. Some others think that this must be done with a specific format, and all the other details are legally written. A legal document doesn't necessarily mean that it has to be done by a lawyer. You can do it yourself and you can even find a couple of great templates that you can follow. As long as the document is signed by the creditor and debtor, it is already considered as a legal document that can be used in court, whenever worse things come to worst.

Before you even decide writing the simple loan agreement, you need a good template to begin with, and the internet is the perfect place to look for these templates. It serves as an outline that you may follow, and the important details must be plotted in your outline. Both parties will have to discuss the terms and conditions, and whichever of those conditions are agreed upon, must be indicated in the agreement. On the other hand, to make sure that everything written is according to what you have talked about, it is your responsibility to read and understand everything that is included in the agreement / contract before placing your signature along with your printed name.

A simple loan agreement consists of the different things that have been agreed upon. This includes the interest rates, the total amount borrowed, postdated checks and required amount to be paid monthly and many other important things that are being verbally discussed during the agreement. This avoids confusions and other forms of misunderstandings that can eventually happen if you will close the deal with verbal agreement alone. If one of the terms or conditions is not met, the loan agreement will also include the penalties and additional fees that are incorporated between the loans. This simple agreement converted into writing protects both the debtor and the lender.