Definition of a Credit Agreement

Credit agreements are written rules and regulations that define the criteria of a loan. Interest rates and the loan period are also summarized within the agreement.

Revolving Credit

Revolving credit is the maximum amount of funds that banks agree to lend to their customers within a specified period of time.

Loan Types

Many different types of loans such as credit cards and mortgages usually have some form of a credit agreement included within the contract. Lenders and customers must agree with one another on the various terms and conditions.

TILA

The Truth in Lending Act (TILA) is a sub-chapter of the Consumer Credit Protection Act (CCPA). Under the terms of TILA, sellers, lenders and property lessors are required to disclose particular credit terms with uniform terminology, location and meaning within the contract.

Terms

Terms for a credit agreement usually include the amount of credit to be advanced, repayment terms and interest charges. Lenders and borrowers are both responsible for setting and understanding the terms of a credit agreement.

Considerations

Credit agreements should include certain clauses that outline jurisdiction for litigation if the need arises, and the lending company should outline information about how to handle funds owed to customers.

References

• Investopedia: Credit Agreement
• BizTerms.net: Revolving Credit Agreement