A credit agreement is a legally binding agreement that documents the terms of a credit agreement; It is made between a person or party who lends money and a lender. The credit agreement defines all the conditions related to the loan. Credit agreements are concluded for both retail loans and institutional loans. Credit agreements are often necessary before the lender can use the funds made available by the borrower. What exactly is a payment? This is the exact amount of money needed to pay off your loan, and it`s probably different from your current credit balance because it may contain interest and fees you owe but haven`t paid yet. You should check your credit agreement before asking for one to understand the terms. You can talk to an advisor if your agreement is not covered or if you are not sure – talk to your nearest citizen council. A statement of payment from a creditor may also be presented to a borrower when recovery measures have been taken from a given debit account. Sarah borrows a car for $45,000 from her local bank. It accepts a loan term of 60 months at a rate of 5.27%. The credit agreement stipulates that she must pay 855 $US on the 15th of each month for the next five years. The credit agreement states that Sarah will pay interest of $US 6,287 during the term of her loan and also lists all other costs related to the loan (as well as the consequences of a breach of the credit agreement by the borrower). Retail credit agreements vary depending on the type of credit granted to the customer.