A loan agreement is a legal document between a borrower and a lender that outlines the terms of a loan. It specifies the amount borrowed, the interest rate, repayment schedule, and any fees involved. This agreement ensures both parties understand their rights and responsibilities, helping to prevent misunderstandings. Typically, loan agreements are used for various purposes, such as personal loans, mortgages, or business financing. They may also include clauses about default, which is when the borrower fails to repay the loan as agreed. Understanding the terms of a loan agreement is crucial for both the borrower and the lender.