Personal loan agreement is a set of documents that you have to sign before the loan is provided to you. These documents contain the term and conditions of bank regarding the personal loan you are availing from the bank. These loan agreements are mandatory to be signed by you to get the loan from the banks. These documents are kind of security for banks in case that don’t repay their loan then on the basis of these agreements the bank can take legal actions against you to recover their loan amount and the amount of interest on that loan.
The loan agreement is basically the legal formality in which bank states that the individual has taken the loan from them and the loaned will follow the rules put up by bank for the loan repayment and other factors about the loan such as various fees of the loan. Before signing these documents, you should read these documents very carefully as after you sign these documents you are bound to follow the terms and conditions of the loan. You normally cannot challenge anything later as you have signed the documents. In fact, in my opinion you should keep a copy of the agreements for future use in case the banks claim differently than the agreement.
The loan agreement is an important thing for both the bank and the loan in case of any dispute between the bank and the loaned.