The terms of a standardised loan are formally presented in writing by way of a sanction letter to each party in the transaction before any money or property changes hands. If a bank requires any collateral, this will be stipulated in the sanction letter as well. Most loans also have legal conditions regarding the maximum amount of interest that can be charged, as well as other clauses such as the length of time before repayment is required. A sanction letter may also include references to fees and costs related to the loan facility.
