Loan Agreement
Also known as: promissory note, credit agreement, loan contract
The legal contract between a borrower and lender documenting the loan amount, interest rate, repayment schedule, fees, and rights of both parties. You should read the full agreement before signing - it is legally binding.
Full definition
A loan agreement (also called a credit agreement, promissory note, or note) is the legally enforceable contract governing your personal loan. Once you sign, you are obligated to the terms in the document. Key sections to read before signing: (1) Interest rate and APR - confirm the rate is what was quoted. (2) Loan amount and disbursement amount - if there is an origination fee, the disbursement (what you receive) will be less than the loan amount. (3) Monthly payment amount and due date. (4) Prepayment penalty clause - most online personal loans have none, but check explicitly. (5) Late payment fee amount and grace period. (6) Default provisions - what events trigger a default (missed payment, declared bankruptcy). (7) Arbitration clause - many lenders require disputes go to binding arbitration rather than court. Electronic signatures: Online personal loans are signed electronically using e-signature platforms. Electronic signatures are fully legally binding under the E-SIGN Act of 2000. Keepping a copy: Always download and save a PDF of the signed agreement. Store it somewhere you can find it years from now if a dispute arises. Right of rescission: For most personal loans, there is no 3-day right of rescission like there is for mortgage refinances on a primary home. Once you e-sign and funds are disbursed, the loan is final. Review carefully before signing.
- Written by
- Get Advance Loan Editorial Team
- Reviewed by
- Compliance Review
- Published
- January 15, 2026
- Last reviewed
- June 15, 2026
- APR (Annual Percentage Rate)APR is the yearly cost of borrowing, expressed as a percentage of the loan amount. It includes interest plus most lender fees, so it's a more complete measure of cost than the interest rate alone.
- Interest rateThe interest rate is the percentage of the loan balance charged per year as interest, excluding fees. It is a component of, but smaller than, the APR.
- Fixed interest rateA fixed rate stays the same for the entire life of the loan, so the monthly payment never changes. Most U.S. personal loans are fixed-rate.
- Variable interest rateA variable rate can change over the life of the loan, usually tied to an index like the prime rate. Monthly payment can rise or fall.
- Prime rateThe prime rate is the benchmark interest rate U.S. banks publish for their most creditworthy commercial customers. Many consumer rates are quoted as prime + a margin.
- Loan termThe loan term is how long you have to repay the loan, usually expressed in months. Common personal-loan terms are 24, 36, 48, 60, and 72 months.
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