Loan Bond with Sureties and Lower Rate of Interest in Case Punctuality in Payment
A loan bond in India recording a personal loan supported by two sureties, with a reduced rate of interest as an incentive for punctual repayment. The debtor acknowledges receipt of the loan and undertakes to repay it in half-yearly instalments with interest; if an instalment is paid at least 15 days before its due date, a lower interest rate applies. The two sureties jointly guarantee repayment of any unpaid loan and interest if the debtor defaults.
LOAN BOND WITH SURETIES AND LOWER RATE OF INTEREST IN CASE OF PUNCTUALITY IN PAYMENT
THIS DEED is executed on this ______ day of ____________ at ____________, between:
1. Mr. X, s/o Mr. Y, r/o ____________ (hereinafter called "the Debtor") of the First Part;
2. Mr. A, s/o B, r/o ____________, and Mr. DC, s/o RA, r/o ____________ (hereinafter jointly called "the Sureties") of the Second Part; and
3. Mr. C, s/o D, r/o ____________ (hereinafter called "the Creditor") of the Third Part.
WHEREAS the Creditor has agreed to advance a loan of Rs. 5,00,000.00 to the Debtor, which is to be repayable in four years with interest at the rate of 18% per annum, provided two persons stand as sureties of the Debtor;
AND WHEREAS the Sureties above named are ready to stand as sureties of the Debtor.
NOW THIS DEED WITNESSETH AS UNDER:
1. That in pursuance of the said agreement, the Creditor has advanced a sum of Rs. 5,00,000.00 (Rupees five lacs only), the receipt of which has been acknowledged by the Debtor.
2. The Debtor shall repay the loan in five years in half-yearly instalments of Rs. 50,000/- with interest at the rate of 12% per annum.
3. That in case the Debtor repays the instalment of loan at least 15 days before the due date, the interest shall be paid at the rate of 10% per annum.
4. That in case of failure on the part of the Debtor to repay the loan and interest, or any part thereof, the Sureties shall be liable to repay such unpaid amount of loan and interest, to which the Sureties have agreed.
We, the above-noted parties, have signed this deed on the date and at the place mentioned above, after fully understanding the contents of this deed, in the presence of the following witnesses.
Name: ____________ Signature: ____________
Address: ____________
(Debtor)
Name: ____________ Signature: ____________
Address: ____________
(Surety)
Name: ____________ Signature: ____________
Address: ____________
(Surety)
Name: ____________ Signature: ____________
Address: ____________
(Creditor)
WITNESSES:
1. ________________________
2. ________________________
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About this template
What is this template?
This document is a formal debt instrument that includes both a principal debtor and two individuals acting as personal guarantors. It is not a simple promissory note because it contains specific repayment schedules and a performance-based interest reduction clause. The document requires formal execution by four distinct parties in the presence of witnesses.
When should you use it?
Use this when a lender requires the security of two third-party sureties and wants to incentivize early repayment through a discounted interest rate. Use a standard Loan Agreement if no sureties are involved or a simple Promissory Note for unsecured, less structured debts.
What's inside
| Clause | Name | What it does |
|---|---|---|
| 1 | Loan Advancement | The Creditor advances Rs. 5,00,000.00 to the Debtor, the receipt of which the Debtor acknowledges upon execution. |
| 2 | Repayment Schedule | The Debtor must repay the loan over five years via half-yearly instalments of Rs. 50,000/- at 12% interest. |
| 3 | Punctuality Incentive | The interest rate drops to 10% per annum if the Debtor pays the instalment 15 days before the due date. |
| 4 | Surety Liability | The Sureties agree to be liable for any unpaid loan or interest if the Debtor fails to make payments. |
Who it's for
- a creditor requiring personal guarantees from two third parties to secure a high-value loan
- a debtor seeking a 2% interest rate reduction in exchange for early instalment payments
- an individual lending Rs. 5,00,000.00 repayable in fixed half-yearly instalments
How long it runs and how it's signed
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