All agreements are contracts. Contracts can be a written agreements or verbal agreements. All loans from banks, credit unions, and other lending institutions are written contractual agreements. These contracts should state the terms and conditions of the loan. The terms include, the amount of the loan, the time length of the loan, the monthly payments, the total payback, and the annual percentage rate. Those stated terms are located in the Fed. box on legal and binding contracts.

Conditions of loans can be term inclusive of the contract, but also states the actions that can be taken in the event of the borrower bending the loan agreement with (late payments) or breaking the loan agreement with (default). Lending agreements usually have a grace period written in it, stating that the borrower have ten (10) days from the due date to make the due payment or the the customer will be charged an extra 10 % of the payment amount plus the due payment. There are many tools available for lenders to enforce written agreements, because they are legal and binding.