Family Loan Agreement Template: Repayment & Interest

Family Loan Agreement Template

This Family Loan Agreement (“Agreement”) is made as of [Date of Agreement].

1. Parties

Lender:

Full Legal Name: [Lender Full Name]

Relationship to Borrower: [Relationship, e.g., “Mother,” “Brother,” “Cousin”]

Address: [Lender Street Address, City, State/Province, ZIP/Postal Code, Country]

Phone: [Lender Phone Number]

Email: [Lender Email Address]

Borrower:

Full Legal Name: [Borrower Full Name]

Relationship to Lender: [Relationship]

Address: [Borrower Street Address, City, State/Province, ZIP/Postal Code, Country]

Phone: [Borrower Phone Number]

Email: [Borrower Email Address]

2. Loan Details

Loan Amount: [Loan Amount in figures] ([Loan Amount in words])

Purpose of Loan (general description): [Purpose, e.g., “education costs,” “home repairs,” “debt consolidation,” “business start-up”]

Loan Type:

☐ Interest-free family loan

☐ Interest-bearing family loan

3. Disbursement of Loan

The Lender agrees to provide the Loan Amount to the Borrower as follows:

Disbursement Date: [MM/DD/YYYY]

Method of Payment: [Bank transfer / Check / Other]

Account or Payee Details: [Account Name and Details or Payee Information]

The Borrower acknowledges receipt of the Loan Amount (or agrees to acknowledge receipt when disbursed) and agrees to repay the loan according to this Agreement.

4. Interest (If Applicable)

Interest Rate: [Annual Interest Rate %] per year

Interest Basis:

☐ Simple interest on the unpaid principal balance

☐ Other: [Interest basis, if different]

Interest will accrue from [Start Date for Interest] until the loan is repaid in full, unless otherwise agreed in writing.

If the parties select “interest-free family loan” in Section 2, this Section 4 may be completed as:

Interest Rate: 0% (no interest will be charged on the loan).

5. Repayment Terms

The Borrower agrees to repay the loan as follows (choose and complete one option):

5.1 Installment Payments

Number of Installments: [Number of payments]

Installment Amount: [Amount per payment]

Payment Frequency: [Monthly / Quarterly / Other]

First Payment Due Date: [MM/DD/YYYY]

Subsequent Payments Due: [e.g., “on the same day of each following month”]

OR

5.2 Single Lump-Sum Payment

Repayment Amount: [Total amount due]

Due Date for Full Repayment: [MM/DD/YYYY]

5.3 Custom Schedule

Repayment Schedule: [Brief description, or reference to separate schedule attached to this Agreement]

All payments will be applied first to any accrued but unpaid interest (if applicable) and then to principal, unless the parties agree otherwise in writing.

6. Method of Payment

Payments will be made in [Currency] by: [Bank transfer / Check / Other method]

Payment Details:

Payee / Account Name: [Name]

Bank / Institution: [Name]

Account Number / IBAN: [Details]

Reference: [Suggested Payment Reference]

7. Early Repayment (Prepayment)

The Borrower may repay the loan, in whole or in part, before the scheduled due dates without penalty, unless otherwise stated here: [Prepayment limitations, if any].

Any early payment will reduce the outstanding principal and may reduce total interest payable (if the loan is interest-bearing).

8. Late Payment and Default

Late Payment:

If a scheduled payment is not received within [Number] calendar days after the due date, the payment will be considered late. The parties may agree to a late fee as follows:

Late Fee (if any): [Currency and Amount or Percentage, or “No late fee”]

Default:

The Borrower will be in default if:

• The Borrower fails to make a payment within [Number] days after written notice of missed payment; or

• The Borrower otherwise materially breaches this Agreement and does not correct the breach within [Number] days after written notice.

The Borrower fails to make a payment within [Number] days after written notice of missed payment; or

The Borrower otherwise materially breaches this Agreement and does not correct the breach within [Number] days after written notice.

If a default occurs, the Lender may, subject to any applicable law:

• Declare the entire remaining balance of the loan immediately due and payable; and/or

• Take lawful steps to recover the outstanding amount, including reasonable costs of collection, if agreed and permitted by law.

Declare the entire remaining balance of the loan immediately due and payable; and/or

Take lawful steps to recover the outstanding amount, including reasonable costs of collection, if agreed and permitted by law.

9. Security (If Any)

This loan is:

☐ Unsecured (no collateral)

☐ Secured by collateral as described below

If secured, the Borrower grants the Lender a security interest in the following property, to the extent allowed by law:

Description of Collateral: [Description of property offered as security, e.g., “car, make/model/VIN,” “equipment,” “savings account,” etc.]

The parties understand that separate documents may be required to properly record or perfect any security interest under local law.

10. Acknowledgment of Relationship and Intent

The parties acknowledge that they are family members and that:

• They wish to keep clear, written terms to protect both sides and preserve their personal relationship.

• The Borrower understands that this is a real loan and not a gift.

• The Lender understands that the Borrower intends to repay the loan in good faith according to this Agreement.

They wish to keep clear, written terms to protect both sides and preserve their personal relationship.

The Borrower understands that this is a real loan and not a gift.

The Lender understands that the Borrower intends to repay the loan in good faith according to this Agreement.

11. Representations

Each party represents that:

• They have the legal capacity and authority to enter into this Agreement.

• They understand the terms of this Agreement and have had the opportunity to ask questions.

• They are signing this Agreement voluntarily and without undue pressure.

They have the legal capacity and authority to enter into this Agreement.

They understand the terms of this Agreement and have had the opportunity to ask questions.

They are signing this Agreement voluntarily and without undue pressure.

12. Tax and Legal Considerations

The parties are responsible for any tax or reporting obligations arising from this family loan under applicable law. For significant loan amounts or complex situations, each party may seek advice from a qualified tax or legal professional before signing.

13. Amendments and Waivers

Any change to this Agreement must be in writing and signed by both the Lender and the Borrower.

If either party chooses not to enforce any part of this Agreement at a particular time, that decision does not waive the right to enforce the same or any other part of this Agreement later.

14. Notices

Any notices under this Agreement will be in writing and sent to the addresses or email addresses listed in Section 1, unless a party provides updated contact details in writing.

Acceptable notice methods may include:

• Personal delivery;

• Mail or courier;

• Email, if both parties regularly use email and agree to receive notices electronically.

Personal delivery;

Mail or courier;

Email, if both parties regularly use email and agree to receive notices electronically.

15. Governing Law

This Agreement is governed by the laws of [State/Province, Country], without regard to conflict-of-law rules, unless the parties specify a different governing law here: [Alternative Governing Law, if any].

16. Entire Agreement

This Agreement contains the entire understanding between the parties regarding this family loan and replaces any prior oral or written discussions or understandings about this specific loan.

17. Signatures

By signing below, the Lender and Borrower agree to be bound by the terms of this Family Loan Agreement.

Lender:

Signature: _______________________________

Printed Name: [Lender Full Name]

Date: [MM/DD/YYYY]

Borrower:

Signature: _______________________________

Printed Name: [Borrower Full Name]

Date: [MM/DD/YYYY]

Witnesses (Optional, if used)

Witness 1:

Signature: _______________________________

Printed Name: [Witness 1 Full Name]

Address: [Witness 1 Address]

Date: [MM/DD/YYYY]

Witness 2 (if required):

Signature: _______________________________

Printed Name: [Witness 2 Full Name]

Address: [Witness 2 Address]

Date: [MM/DD/YYYY]

Notary Acknowledgment (Optional, if notarization is required)

State/Province of [State/Province]

County of [County]

On [Date], before me, the undersigned Notary Public, personally appeared [Lender Full Name] and [Borrower Full Name], personally known to me or proved to me on the basis of satisfactory evidence to be the persons whose names are subscribed to this Family Loan Agreement, and they acknowledged that they executed it for the purposes stated therein.

Notary Public Signature: _______________________________

Notary Public Printed Name: [Notary Name]

My Commission Expires: [Date]

Notary Seal: ☐