Lending or borrowing money has turned many a relationship sour. This is why you don’t enter into a loan agreement without a legal document to support it. 

It’s a good thing we’ve prepared loan agreement samples that you can easily download and fill out. Whether it’s a collateral (secured) or a non-collateral (unsecured) loan, our free sample templates will help you have legal proof to hold on to if the borrower defaults or the lender demands something that isn’t included in your original agreement.

Related: Promissory Note Sample Philippines

Loan Agreement Sample Philippines: Free Editable Templates

No time to read the article? No problem. Click the link corresponding to the type of loan agreement sample template you’re looking for, and it will automatically download to your device. If you want to know more about loan agreements in the Philippines, please scroll down to read the article.

1. Loan Agreement Sample Philippines (With Collateral)
2. Loan Agreement Sample Philippines (Without Collateral)

What Is a Loan Agreement?

A loan agreement is written evidence of a loan between persons or business entities (i.e., partnerships and corporations). It lays down the complete details of the loan, including the amount, terms, collateral (if it’s a secured loan), and what will happen if the loan defaults. 

What Are the Philippine Laws and Rules Related to Loan Agreements?

1. Civil Code of the Philippines

This is like our loan agreement bible. The Philippines’ Civil Code¹ covers all contracts’ basics, including loans. It discusses things like agreeing to the loan and why it’s happening.

Imagine you’re lending money to a friend. You both need to agree on the loan amount, when it should be paid back, and what happens if it isn’t. The Civil Code sets the ground rules for these agreements. It’s like a guidebook ensuring everyone knows and agrees on the basics.

2. Usury Law

This law sets limits on interest rates. You can’t just charge whatever you want; there are rules.

Let’s say you’re lending money to start a small business. You can’t just charge any interest rate you feel like. The Usury Law says the maximum interest rate for a secured loan is 12% per annum, while the maximum interest rate for an unsecured loan is 4% per annum². So, this law makes sure lenders play fair and don’t take advantage of borrowers.

3. Truth in Lending Act

This is about honesty. Lenders must spill the beans on the loan terms so borrowers know the situation. 

Say you’re borrowing money to buy a car. The lender can’t just throw a pile of papers at you and say, “Sign here.” Instead, they need to explain everything clearly. They should tell you how much the loan will cost, what the monthly payments will be, and if there are any hidden fees. This law ensures you know exactly what you’re getting into³.

4. Data Privacy Act of 2012

If personal data is involved, like your name and address, this law ensures it’s protected⁴.

Let’s say you’re applying for a personal loan online, and you need to provide your details like your name, address, and maybe even your ID number. The Data Privacy Act ensures that your personal information is protected. It means the lender can’t share your info with anyone or use it for purposes other than what you agreed upon when taking the loan.

What Are the Parts of a Loan Agreement?

Now, let’s break down that loan agreement template we gave you:

1. Loan Details: This part talks about the basics, like how much money you’re dealing with, how long you have to pay it back, and how much extra you must pay (interest rate).
2. Loan Terms: This section dives deeper. It explains why you’re taking or giving the loan, how you’ll get the money, when you’ll pay it back, and how much you’ll pay each time. If you want to pay early, it should say that too.
3. Loan Security: Sometimes, you’ll put up something valuable (like a car) as a backup in case you can’t pay. There are also loans without those extras, meaning it’s “unsecured.” Either way, this section will let you know what type of loan you’re dealing with. 
4. Default: This is the “what if” part. It tells you what happens if someone doesn’t pay on time.
5. Governing Law: This bit says that Philippine laws are in charge. So, if there’s a problem, you’ll sort it out locally.
6. Entire Agreement and Amendments: The last part says that the paper you’re signing is the final deal. If you want to change it later, both sides must agree, and it should be in writing.

How to Use and Fill Out the Loan Agreement

1. Write your names, addresses, and phone numbers at the top. 
2. Put in how much cash you’re talking about, how long you’ll pay it off, and how much extra you’re handing over as interest. 
3. Explain in the “Loan Terms” section what the money’s for, how you’ll get it, and when you’ll pay it back. 
4. If someone messes up and doesn’t pay, decide what happens next. Lastly, remember that Philippine laws will be in charge if things go haywire.
5. Skip the last part of the loan agreement template (i.e., Acknowledgment) as it’s intended for the notary public where you’ll go to authenticate the loan agreement.

Frequently Asked Questions

In a nutshell, loan agreements in the Philippines aren’t as tricky. Stick to the rules, use the template right, and you’ll be safe. If you need more clarification, talk to a lawyer.

References

1. Republic Act No. 386 (Civil Code of the Philippines) (1949).
2. de Zuñiga, J. (2021) Usury Law, Manila Bulletin Online. Available at: https://mb.com.ph/2021/06/10/usury-law/ (Accessed: 09 October 2023).
3. Republic Act No. 3765 (Truth in Lending Act) (1963).
4. Republic Act No. 10173 (Data Privacy Act of 2012).