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The Loan Cancellation Letter is a crucial document used when terminating a loan agreement under German law, whether due to full repayment, early settlement, or mutual agreement to cancel. It serves multiple purposes: confirming the loan's termination, acknowledging full settlement of obligations, releasing any security or collateral, and providing legal certainty to all parties. The document must comply with German Civil Code (BGB) requirements, particularly sections relating to loan agreements (§488-490) and contractual terminations. It's essential in both commercial and private lending contexts and typically includes details of the original loan, confirmation of final settlement, and terms of mutual release. The letter becomes a vital record for both lender and borrower, serving as evidence that the loan obligations have been fully discharged.

1. Header Information: Sender and recipient details, date, and reference numbers

2. Loan Reference: Clear identification of the loan agreement being cancelled, including date, parties, and original loan amount

3. Cancellation Declaration: Explicit statement of loan cancellation and effective date

4. Outstanding Amounts: Confirmation of any final payments or zero balance

5. Mutual Release: Statement confirming mutual release from future obligations

6. Return of Security: Confirmation of return or release of any security or collateral

7. Closing: Formal closing, signature blocks, and contact information