The loan contract or loan agreement in Texas should contain a number of items. A contract is a promise or set of legally bound promises either written or oral. A written contract is a good way to keep track of the terms of an agreement. In Texas there are certain elements that are required to make an enforceable contract:
• An offer has to be made.
• There has to be an acceptance of the offer.
• A meeting of the minds about the terms and subject matter of the agreement.
• Communication that both parties are consenting to the terms.
• The contract must be delivered so it can bind the parties involved.
The following are what is needed to create a loan contract template:
• An agreement number, used to file the loan contract if many contracts are generated by the creditor.
• The date of the agreement. This should be the date of the acceptance of the agreement.
• The name, address, and phone number of the creditor.
• The name, address, and phone number of the debtor.
• The amount of the loan.
• The interest rate of the loan.
• The dates depicting that the loan are effective: it includes beginning and the ending.
• Monthly payments of the loan.
• Late fee if it is not paid on time.
• Signed and dated by Creditor.
• Signed and dated by Debtor.
• Signed and dated by a Witness.
With this information a template can be created to make contracts. There are a number of different loan types in Texas. There are commercial loans, payday loans, home equity loans, signature loans, mortgages, auto loans, and pawn shop loans. The template given above is a general idea of what goes into a loan contract.
A lender may require an upfront payment before the loan is disbursed. This is illegal. Many times this indicates a scam and the lender will take the money and disappear. All loan contracts should be looked at by an attorney. Usury laws need to be followed. Usury is where a lender charges a large interest rate that is above the state maximum. Commercial loans in Texas are authorized by Chapter 306 of the Texas Finance Code. These loans cannot be more than eighteen percent interest annually. Inflation may cause the interest rate to increase to twenty four percent. A commercial loan of over $250,000 can have up to 28 percent annual interest rates. Usury rates for other types of loans vary greatly. Motor vehicle loans can carry up to twenty seven percent annual interest rates. A pawn shop can charge upwards 240% annually.
Consumer loans that are made for personal or household use are authorized by Chapter 342 of the Texas Finance Code. It indicates that interest rates depend on the type of loan and the amount borrowed. The Office of Consumer Credit Commissioner (OCCC) are the ones who set the interest rates and should be consulted when entering into a loan contract. A loan template can be made to assist in making contracts. Contracts should be reviewed by an attorney to make sure they are legal and follow all of the laws of Texas. Loan contracts are legal binding documents. They are enforceable by a court of law.