For more information, check out our article on the differences between the three most common credit forms and choose what`s right for you. Interest is due at the end of each interest period, interest periods may be fixed periods (usually one, three or six months) or the borrower can choose the interest period for each loan (the options are usually one, three or six months). The judgment of the Court of Cassation of 27 May 1998 was the first court decision challenging the traditional characterization of loan contracts as contractual investments. The Tribunal found that credits granted by credit professionals to non-professionals are governed by Article L 311-2 of the French Consumer Protection Act and do not constitute infringements of the professional association. Therefore, there is a contract as soon as both parties have expressed a willingness to border on it. This decision was based on a specific provision of Article L 311-15 of the Consumer Protection Act, which expressly states that such credit contracts exist as soon as the offer of credit has been accepted by the non-professional party. In the area of interests, insert information for any interest. If you don`t calculate interest, you don`t need to include this section. However, if you are, you must specify when the interest on the loan will be collected and whether the interest will be simple or assembled. Simple interest is calculated on the principal unpaid, while compound interest is calculated on unpaid principal and any unpaid interest. Another aspect of interest you need to have in detail is whether you have a fixed or variable interest rate. A fixed-rate loan means that the interest rate remains the same for the duration of the loan, while a variable rate loan means that the interest rate may vary over time depending on certain factors or events.
Before lending money to someone or providing services without payment, it is important to know if you need a credit contract to protect yourself. You never really want to borrow money, goods or services without a credit contract, to make sure you`re reimbursed or that you can take legal action to get your money back. The purpose of a loan agreement is to describe in detail what is loaned and when the borrower must repay it and how. The loan agreement contains specific conditions that describe precisely what is given and what is expected in return. Once it has been executed, it is essentially a promise to pay by the lender to the borrower. They may also include advance information if the borrower is interested in prepaying the loan. Many borrowers are concerned about advances and you would be wise to include a clause in your credit agreement that talks about advance options, if any. If you allow a prepayment, you must include this information and details if they are allowed to pay all or part only in advance and if you charge a down payment fee if they wish. If you charge a down payment fee, you need to state in detail how much it will be. Traditionally, lenders require that a percentage of the principal be paid in advance before they can pay the balance. If you do not authorize the advance, you must state in detail that this is not permissible, unless you, the lender, have given written permission. There will also be delay provisions for breaches of the convention itself.
They may grant time for remedial action on the part of a borrower and, in any event, apply only to substantial infringements or violations of the main provisions of the agreement.