What Is a Legal Loan Document?

Loan documents are agreements that contractually secure financing with promises to pay. Most loan documents are explicitly explained on the document itself or by the closing agent. In most cases, loan documents signed at a closing can be argued as legal documents.

    Loan Agreement

        The loan agreement is the main legal document in any loan contract. This holds true for small credit accounts, car loans and mortgages. The loan document breaks down the following terms: the principal amount borrowed, the term (the length of the loan itself), the rate at which the loan will be charged (and if the rate is fixed or adjustable), and the monthly payment.
    Promissory Note

        The promissory note explains the way in which payments are made, how much will be paid, how much of each payment will be applied to principal and interest, and what will happen if the loan goes into default. By signing the promissory note, you are agreeing to make the payments as scheduled or suffer the consequences of default.
    Surety Agreement

        While this document is not in all loan documents, it may be in certain mortgages and business loans. Essentially this document means that if you default on the loan, you agree to pay the remainder of the balance out of your personal assets. This document will hold up in a lawsuit, so it's important to have an attorney review it.
    Loan Summary

        This document is also not in all documents, but, when it is, it is a legal document. This form outlines all the pertinent details of the loan itself. These details include loan amount, term, rate, default provisions and monthly payments. This document provides for a complete summary of the loan agreement before the borrower fully commits.
    Warning

        Be sure to take advantage of a recission period if offered. This allows the borrower to review all legal documents for a few days before fully committing to the loan.