The credit agreement.

The conclusion of a loan requires a valid loan contract. In terms of freedom of contract, this can be concluded verbally or in writing in Austria. There are also no specific legal requirements for a loan agreement. As security for both contracting parties – lender and borrower – it is highly recommended to write a written contract with specified financing details.

What is a loan agreement?

What is a loan agreement?

The loan agreement is a document in which borrowers and lenders agree to borrow or lend money under certain conditions specified here. It thus represents the legal basis for the agreed lending business and is a consistent declaration of intent.  The credit agreement between the credit institution and the consumer must be concluded in writing due to the Consumer Protection Act.

What are the components of a loan agreement?

What are the components of a loan agreement?

Credit type:

It can be a loan, a term loan, a current account credit – i.e. a money loan, but it can also be a liability loan or a guarantee loan. Once used, the loan and the repayment loan can only be repaid, while the current account credit is revolving and can be used again after repayments.

Liability loans are not money loans and are only a contingent loan. The type of loan determines the purpose and availability. Depending on the type of credit, the credit institutions assign account number ranges. The associated account number can be seen on the loan agreement.


Lenders and borrowers and their address must be listed. In the case of companies, the correct description of the company wording according to the extract from the commercial register must be observed.

Credit Amount:

The total amount represents the amount to be repaid. The deducted processing fees and costs incurred for the loan are deducted to give the total loan amount, ie the amount to be paid out.


The currency of the loan amount must be stated. It is also possible to borrow money in other currencies. So-called foreign currency loans, however, involve major risks of price fluctuations. The foreign currency loan agreement refers to these special features and also regulates conversion scenarios, among other things.

Purpose and use:

It is agreed which dedication the loan amount will be allocated to and in what form it can be claimed.

Term and repayment:

The term is the period of time until the due date. The term is based on the type of loan and the purpose. Private housing loans or corporate investment loans are usually seen over the long term.

Consumer loans, for example for home furnishings or buying a car, are usually short to medium-term, that is, due in 1-6 years. The financial scope on the current account is either intended as a 3-month bridging framework or without a time limit “until further notice” as a permanently granted account framework, and can only be terminated by cancellation.

A loan can be made to maturity. This means that there will be no payment in installments, the entire amount must be paid in one go at the end of a specified period. Payment of the closing items and interest can, however, very well be requested on the closing dates.

If you have agreed on an installment payment, the number of installments, the installment amount and the installment due dates are precisely defined here. Even special repayments can be made binding here. The debit order for the due installments or closing items from a checking account can be easily incorporated.

Interest and Fees:

The agreed interest rate is held. It can be a fixed interest rate for the entire term or you can opt for a certain fixed interest period followed by a variable interest rate.

Variable interest rates are mostly based on the Cream Bank or Lite Bank with a market-compliant surcharge. The interest rate is therefore constantly adjusting to the current capital market interest rates. The interest rate agreement with the exact adjustment clause is printed.

The type of interest and the closing period can also be found under this point. In addition to the nominal interest rate, the effective interest rate must also be calculated for a consumer. This interest rate is calculated after all costs and fees have been included. This ensures the transparent presentation of the total costs.

Account management fees, framework commissions, one-time processing fees, possible reminder fees and all kinds of costs appear on the credit agreement or on a separate price sheet that is attached to the agreement.

Default and overdraft interest:

If the borrower is in arrears with the installment payment or the agreed credit line is exceeded, the lender may charge default or overdraft interest to the account, if agreed. The percentage is determined. There is only an upper limit for default and overdraft interest for consumers.

Fees and cash expenses:

Third-party costs may arise, for example, for signing a notary’s signature, registering land registers or obtaining expert reports, and are also listed in the loan agreement.


All collateral provided for this loan is listed under this point. With guarantees, pledges of movable goods such as valuables, pledges of money deposits of all kinds, pledges of immovable goods such as real estate, i.e. mortgage collateral, assignment of ownership of vehicles or machines are just a few common examples of credit protection.

In order to hedge the risk of death, credit residual liability insurance or the pledging of life insurance are often required.
The type and extent of the security requested depend on the creditworthiness of the borrower and of course influence the negotiation of conditions. More collateral reduces a bank’s risk costs. In return, attractive terms await the borrower.


A number of other points are agreed in the loan agreement. Consumer protection information for spouses in the event of separation and data protection declarations are expressly acknowledged by the borrower when the credit agreement is signed.
Right of withdrawal from the loan agreement, termination rights – in addition to the legal options, there are also contractual termination rights, the obligation to disclose the financial situation and notification requirements are some examples. Many of these fundamentals of credit agreements can be found in the attached general terms and conditions of the credit institutions.

Place and date of signature:

The contract is finally sealed with the place, date and signature of the contracting parties. The banks will check that the borrower’s signatures are correct. Commercial register statements provide information on who is authorized to sign for a company. Signatures on pedges for land register entries even have to be certified by a notary.

Before a contract is drawn up, lenders are obliged to provide consumers with pre-contractual information in accordance with the Consumer Protection Act. It is an EU-standardized form that makes loan offers from different banks comparable, even on an international level. In addition, the draft credit contract is to be handed over.

Credit agreements can also be concluded privately. The lender lends the money without trade. It is particularly important to ensure that the contract is drawn up in as much detail as possible in order to protect both contracting parties and to ensure compliance with the commitments entered into by the individual business partners.