Prompt Pack Lending Platform Terms

Lending Platform Terms

When to use this

Use this skill when a digital lending platform, fintech company, or regulated financial institution needs to draft its borrower-facing terms of service governing the origination, disbursement, and repayment of loans. The document is addressed to borrowers and governs the relationship from application through loan closure or default.

Triggers:

• "Draft the loan terms for our consumer lending app."
• "We're launching an SME lending platform — what should the terms cover?"
• "We need terms that comply with UAE Central Bank lending regulations."

Required inputs

Optional inputs

• Governing law and dispute resolution forum
• Credit bureau(s) used for credit assessment
• Collection agency relationships
• Privacy policy cross-reference
• Early repayment terms (whether permitted and at what cost)

Document structure

1. Introduction and Acceptance

• Platform identity and regulatory status (licensed by [UAE Central Bank / SAMA / BdL / DFSA / FSRA / etc.])
• Scope: these terms govern all loans originated through the platform
• Acceptance: by submitting a loan application, the borrower accepts these terms
• Capacity: borrower must be of legal age and capacity in their jurisdiction

2. Eligibility and Application

• Eligibility criteria: nationality, residency, minimum age, income thresholds
• Application process: steps to apply (KYC / AML submission, income verification, identity documents)
• Credit assessment: platform uses [named credit bureau(s)] and internal scoring models; approval at platform's sole discretion
• No guarantee of approval: explicitly state that submission of an application does not guarantee loan approval

MENA note: UAE requires credit bureau checks via Al Etihad Credit Bureau (AECB); KSA through SIMAH or Bayan Credit Bureau; platforms must comply with applicable credit reporting laws.

3. Loan Terms and Disclosure

For each loan product, disclose in clear language:

• Principal amount
• Annual percentage rate (APR) or equivalent total cost of credit disclosure
• For Sharia-compliant products: profit rate, murabaha cost price, and total payment amount instead of "interest"
• Tenor (term in months)
• Repayment schedule (monthly installments, amounts, due dates)
• Total amount repayable
• Fees: origination fee, processing fee, early repayment fee, late payment fee
• Any security or guarantees required

Consumer protection requirement: Most jurisdictions require disclosure of the total cost of credit (not just the nominal interest rate) in a standardized summary box before acceptance. Confirm local regulatory requirements.

4. Disbursement

• Method: transfer to verified bank account; timing (same day / T+1 / T+2)
• Conditions to disbursement: signed loan agreement, completed KYC, any required guarantees
• Currency: AED, SAR, USD — specify; for LBP-denominated loans, include FX risk disclosure given currency instability

5. Repayment Terms

• Due dates and payment method (direct debit, bank transfer, platform wallet)
• Prepayment: right to repay early; whether early repayment fee applies (many consumer protection regimes cap or prohibit early repayment penalties)
• Grace period (if any) after a missed payment before default is triggered
• Allocation of payments: typically applied first to fees, then interest/profit, then principal (disclose clearly)

6. Default and Consequences

Define default clearly: typically, a payment missed by more than [5 / 10 / 30] days, or material misrepresentation in the application.

On default:

• Late payment charge: state the daily/monthly rate (subject to regulatory caps)
• Acceleration: right of platform to declare the full outstanding balance immediately due
• Credit bureau reporting: notify the borrower that default will be reported to the applicable credit bureau
• Collection: the platform may engage licensed collection agencies; describe the process and borrower rights

Do not include: threats of criminal action for civil debt default (common misuse in some MENA markets); penalties that constitute unenforceable liquidated damages under applicable law.

7. Collection Practices

• Permitted contact channels and hours (comply with consumer protection guidelines on harassment)
• Right to assign the debt to a third-party collection agency or debt purchaser
• Debt restructuring: platform's discretion to offer restructuring; not a binding obligation

8. Consumer Protection

Include explicit statements of borrower rights under applicable law:

• Right to receive a copy of the loan agreement
• Right to early repayment (subject to fee, if any)
• Right to complain: internal complaints procedure, then regulatory ombudsman or supervisory authority
• Anti-discrimination: loan decisions not made on prohibited grounds

9. Privacy and Data Use

Cross-reference the platform's Privacy Policy. Specifically state:

• Credit bureau sharing: borrower consents to credit bureau reporting of application and repayment data
• Marketing: opt-in / opt-out for marketing use of data
• Fraud prevention: data shared with fraud prevention databases

10. Governing Law and Dispute Resolution

• For UAE-licensed platforms: typically DIFC Court or UAE courts with Dubai International Arbitration Centre (DIAC) arbitration option; consumer protection law may limit choice-of-law clauses
• For KSA: Saudi courts; CIBAFI arbitration for Islamic finance disputes
• Mandatory: consumer complaints must first go through internal process and then to regulatory ombudsman before arbitration

11. Amendments to Terms

• Platform reserves right to amend terms with [30-day] notice for prospective loans
• Existing loans governed by terms in effect at loan origination date
• Consumer protection law may restrict unilateral amendment of interest rates on existing loans

Jurisdictional notes

Common mistakes

• Failing to disclose total cost of credit: regulators in UAE, KSA, EU, and UK require the equivalent of an APR / APRC in a standardized disclosure; quoting only the monthly rate misleads borrowers.
• Sharia-non-compliant language: using "interest" in documents for Islamic finance products creates regulatory and reputational risk; use "profit rate" and "murabaha" / "ijara" terminology consistently.
• No complaints procedure: most consumer protection regimes require an internal complaints procedure with defined response timelines.
• Blanket data consent: MENA data protection laws (UAE PDPL, KSA PDPL) require specific consent for each processing purpose; a single "I agree to use of my data" clause is insufficient.

Related skills

• [[prompt-pack-payment-services-agreement]]
• [[prompt-pack-payment-facilitator-agreement]]
• [[prompt-pack-open-banking-api-terms]]
• [[prompt-pack-privacy-impact-assessment]]
• [[heuristic-always-state-jurisdiction-first]]