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Personal Loan Agreement

Clearly define private loan terms and repayment obligations with this Personal Loan Agreement Template.

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Personal Loan Agreement

Personal Loan Agreement


This Personal Loan Agreement ("Agreement") is made and entered into on [Date], by and between:

Lender: [Full Name / Company Name]
Address: [Lender’s Address]

and

Borrower: [Full Name / Company Name]
Address: [Borrower’s Address]

Together referred to as the "Parties."



1. Loan Amount

The Lender agrees to loan the Borrower the principal sum of $[Loan Amount] (the "Loan").


2. Disbursement Date

The Loan shall be disbursed to the Borrower on or before [Date], via [Payment Method – e.g., bank transfer, cash].


3. Interest Rate

☐ The Loan shall bear interest at an annual rate of [X]%, calculated on the unpaid balance.
☐ This is an interest-free loan.


4. Repayment Terms

The Borrower agrees to repay the Loan as follows:

  • Repayment Start Date: [Date]

  • Payment Frequency: ☐ Weekly ☐ Monthly ☐ Other: __________

  • Payment Amount: $[Amount] per installment

  • Final Due Date: [Date of final payment or loan maturity]

Early repayment is:
☐ Allowed without penalty
☐ Subject to [X]% early repayment fee


5. Late Payment

A late fee of $[Amount] will apply if any installment is more than [X] days past due. Continued non-payment may result in legal action.


6. Collateral (Optional)

☐ This Loan is secured by the following collateral: [Description of item/property]
☐ This is an unsecured personal loan.


7. Default

If the Borrower fails to make payments as agreed, or breaches any term of this Agreement, the full remaining balance shall become immediately due and payable.


8. Governing Law

This Agreement shall be governed by and construed in accordance with the laws of [State/Country].


9. Entire Agreement

This document represents the entire agreement between the Parties and supersedes all prior oral or written understandings.


IN WITNESS WHEREOF, the Parties have executed this Personal Loan Agreement as of the date first written above.


Lender Signature
Name:
Date:


Borrower Signature
Name:
Date:


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Personal Loan Agreement

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PERSONAL LOAN AGREEMENT FAQ


What is a Personal Loan Agreement?

A personal loan agreement is a legally binding document that clearly outlines the terms under which one individual lends money to another. It specifies the loan amount, repayment schedule, interest rate (if applicable), payment method, and consequences for late or missed payments. Unlike informal verbal arrangements, a written personal loan agreement ensures both parties understand their rights and obligations.


Why do you need a Personal Loan Agreement?

A personal loan agreement provides written evidence of the loan terms, which helps prevent misunderstandings or disputes between the lender and borrower. It protects both parties by making the loan enforceable in court and can also outline provisions for early repayment, collateral (if any), and penalties for default. Having a signed agreement reduces the risk of strained relationships—especially when lending to family or friends—by keeping expectations clear.


When should you use a Personal Loan Agreement?

Use a personal loan agreement whenever money is borrowed or lent between individuals, whether for personal expenses, debt consolidation, emergency funds, or other private purposes. It is particularly important when significant sums are involved, repayment will occur over time, or interest will be charged.


How to write a Personal Loan Agreement?

Identify the lender and borrower by full legal name and contact information, specify the loan amount, repayment terms, interest rate (if applicable), late payment penalties, and any collateral or guarantees. Include the governing law, dispute resolution terms, and require both parties to sign and date the agreement. For added security, consider having the document witnessed or notarized.


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