Advance Commitment Law and Legal Definition

Advance commitment is a written promise or an agreement to take some future action. Usually financial institutions lend money to the customers on an advance agreement entered into between the parties. Terms for the loan will be agreed by both parties in advance to payment. A bank lending money on advance commitment, charges a commitment fee. The customer must keep a checking account with the bank and a part of the loan will be deposited as a compensating balance at the time of payment of loan amount.