Writing a Loan Confirmation Letter [Free Sample]

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A loan confirmation letter is a written financial agreement that is sent after two or more parties have a financial transaction agreement in person or over the phone. The letter is a legal document and protects both parties’ rights. 

It should contain all of the details that were mentioned by the parties in the agreement. One party writes the letter and sends it to the other party to check the facts and sign.

The letter can be between any two parties such as two businesses or companies, two individuals, a doctor and a patient or a company and a client.

There are three main objectives for a loan confirmation letter.

  1. The letter clearly states the financial agreement so that both parties fully understand their respective responsibilities as well as the responsibilities of the other party.
  2. The letter also confirms the seriousness on the oral agreement.
  3. The letter can be presented in court if either party fails to fulfil his or her agreed-to financial responsibility.

A loan confirmation letter should be written as soon as possible after an oral financial agreement is made. This not only helps avoid inaccuracies, it also solidifies an agreement before it can be denied by either party.

The letter should include the contact information of both parties and the state where the laws will govern the agreement. If the letter is from a company or medical office, it should be written on formal letterhead. 

It should be addressed to the name of the person who is part of the agreement. There is no need for any introductory information or social pleasantries. It should begin with the nature of the agreement.

Include Any Agreed Upon Terms

The letter should include any agreed-upon terms including payments to be made, when the agreement goes into effect and when it will end, if applicable, as well as how the process will work. For example, whether payments are made on a regular basis or if an invoice is sent.

The person who writes the letter should ask the other party to look for any inaccuracies in the terms and conditions laid down in the letter and, if they feel the terms are not correct, they should contact the sender at their earliest convenience to suggest any changes.

The letter should clearly state its purpose. For example, it is a letter to confirm a phone conversation or person-to-person conversation where a financial agreement was made.

State The Exact Of The Agreement

It should state the exact nature of the agreement such as repayment of a loan or up-front health care payments. It should mention the date the agreement begins and ends, for example, when the loan is repaid. 

The sender should sign and date two copies of the letter and send both to the receiver. The receiver can sign both copies and keep one and send the other back to the sender.

If either party reneges on the terms of the agreement, the other party can take them to court if they have a copy of the financial agreement letter and proof that the other party did not fulfill his or her agreed obligations. 

Below is a sample loan confirmation letter. It should be written in formal business-letter style and sent by certified mail. Both parties should keep a signed copy of the letter. Confirmation letters serve both parties in case of any misunderstanding with regards to the agreement.

Sample Loan Confirmation Letter

Name of Sender
Address of Sender
City, State, Zip Code


Name of Receiver
Address of Receiver
City, State, Zip Code

RE: Financial agreement between Name of Sender and Name of Receiver in Name of State

Dear Name of Receiver:

This letter is a formal financial agreement that is based on our telephone conversation on DATE. It details the agreement we made whereas I will loan you $5,000 to be repaid in $200 increments with no interest each month for 25 (twenty-five) months with the last payment to be made on DATE.

Please review the details of our financial agreement and, if you agree with all the terms, please sign the letter and return a copy to me. If you disagree with the terms, kindly let me know, and we can come to an agreeable settlement.

Terms of Financial Agreement with Name of Receiver:

This financial agreement is between Name of Sender, Address of Sender, Phone or Email of Sender and Name of Receiver, Address of Receiver and Phone or Email of Receiver. The amount of $5,000 (five thousand dollars) will be paid to Name of Receiver by Name of Sender on DATE.

It will be repaid by Name of Receiver to Name of Sender in $200 amounts on the first of each month for 25 months starting DATE with the last payment on DATE. The payment will be made by personal check that, when cashed and returned, will be the receipt for the payment.

I, Name of Sender, agree with these conditions.

Signature of Sender DATE
Printed Name of Sender

I, Name of Receiver, agree with these conditions

Signature of Receiver DATE
Printed Name of Receiver

Frequently Asked Questions (FAQ's)

1. What is a loan confirmation letter?

Answer: A loan confirmation letter is a document that confirms the terms and conditions of a loan agreement between a lender and borrower. 

It typically includes information such as the loan amount, interest rate, repayment terms, and any fees or charges associated with the loan.

2. What is the purpose of a loan confirmation letter?

Answer: The purpose of a loan confirmation letter is to provide written confirmation of the terms and conditions of a loan agreement. It serves as proof of the loan and its terms, and can be used as evidence in case of any disputes or legal issues.

3. How do I write a loan confirmation letter?

Answer: A loan confirmation letter should include the following information: the names of the lender and borrower, the loan amount, the interest rate, the repayment terms, and any fees or charges associated with the loan. 

It should also include the date the loan was granted, and the date the loan will be due. It should be signed by both the lender and borrower, and a copy should be provided to both parties.

4. What should I do after receiving a loan confirmation letter?

Answer: After receiving a loan confirmation letter, you should review the terms and conditions of the loan to ensure that they are accurate. 

If there are any errors or discrepancies, you should contact the lender and request that they be corrected. You should also keep a copy of the loan confirmation letter for your records.

5. What happens if I don’t pay back the loan as per the loan confirmation letter?

Answer: If you don’t pay back the loan as per the loan confirmation letter, it can result in late fees, penalties, and increased interest charges. 

The lender may also take legal action to recover the debt, which could include wage garnishment, property liens, and even bankruptcy. 

It is important to make sure you can afford the loan before taking it out, and to make payments on time to avoid any negative consequences.

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