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The Loan Cancellation Letter is a crucial document used in Nigerian business and financial transactions when a loan needs to be formally terminated before its original maturity date. This may occur due to early repayment, debt forgiveness, loan restructuring, or other circumstances agreed upon by the parties. The letter must comply with Nigerian banking regulations and contract law, including the Banks and Other Financial Institutions Act (BOFIA) 2020 and relevant Central Bank of Nigeria directives. It serves as official documentation of the cancellation, protecting both lender and borrower from future claims or obligations related to the loan. The document typically includes specific details about the original loan, confirmation of cancellation, effective date, and terms of mutual release. For legal validity in Nigeria, it must be properly executed by authorized representatives and may require appropriate stamping under the Stamp Duties Act.

1. Letter Header and Date: Formal business letter header including sender's details, recipient's details, and date

2. Reference Line: Reference to the original loan agreement number/details

3. Subject Line: Clear indication that this is a Loan Cancellation Letter

4. Loan Details: Identification of the original loan agreement, including date, parties, and amount

5. Cancellation Statement: Clear and unambiguous statement of the loan cancellation

6. Effective Date: Specification of when the cancellation takes effect

7. Mutual Release: Statement releasing both parties from further obligations

8. Return of Security: Confirmation of return of any security documents or collateral

9. Signature Block: Space for authorized signatures and dates