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The Loan Confirmation Letter is a crucial document in South African banking practice, issued following the successful assessment of a loan application. It serves as the first formal communication of loan approval and bridges the gap between loan application and final loan agreement execution. The letter must comply with South African banking regulations, particularly the National Credit Act 34 of 2005, and includes essential information such as loan amount, interest rates, repayment terms, and conditions precedent. While not the final loan agreement, it creates certain obligations and expectations between the parties and is often used in corporate record-keeping and preliminary business planning. Financial institutions use this document to provide borrowers with clear, written confirmation of their lending commitment and the fundamental terms under which the loan will be provided.

1. Letterhead and Date: Bank's official letterhead, date of letter, and reference number

2. Recipient Details: Full name and address of the borrower

3. Subject Line: Clear identification of the document as a loan confirmation letter with reference to any application number

4. Loan Approval Confirmation: Clear statement confirming the loan approval and reference to the application

5. Loan Details: Key loan terms including principal amount, interest rate, term, and purpose of the loan

6. Repayment Terms: Details of repayment schedule, installment amounts, and payment methods

7. Interest and Fees: Breakdown of interest calculation method, applicable fees, and charges

8. Bank Account Details: Account details for loan disbursement and repayment collection

9. Key Conditions: Essential conditions that must be met before loan disbursement

10. Contact Information: Details of the responsible bank officer and department for queries

11. Signature Block: Authorized bank signatory details and space for signature