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Personal Loan Agreement Template – Illinois
Define clear loan terms and repayment obligations in Illinois with this Personal Loan Agreement Template.
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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 Principal and Intended Use
Principal amount: $[Loan Amount]. Purpose: [Purpose] — for reference unless restricted by this Agreement. No broker or origination fees unless specified.
2. Disbursement Logistics
Funding by [ACH/wire/check] on/before [Date]; Borrower provides accurate account details in writing. Both Parties will keep proof of transfer and receipt. Any bank or courier charges are paid by ☐ Lender ☐ Borrower.
3. Interest Selection
☐ Interest at [X]% per annum on outstanding principal. ☐ Interest‑free — no interest or disguised charges apply. Interest (if any) accrues from funding.
4. Repayment Mechanics
Installments of $[Amount] due ☐ Weekly ☐ Monthly starting [Start Date]; maturity [Maturity Date]. Application of payments: fees (if any) → interest (if any) → principal, unless otherwise agreed. Prepayment is ☐ permitted without penalty ☐ subject to [X]% fee.
5. Delinquency; Returned Payments
Late fee $[Late Fee] after [X] days; returned item fee $[Return Fee]. Repeat delinquency may constitute default and trigger acceleration. Borrower should notify Lender of anticipated payment issues early.
6. Security (Optional)
☐ Secured by [Collateral] with a perfected security interest as required by law. ☐ Unsecured — no collateral pledged. Borrower warrants the collateral is free of undisclosed liens.
7. Default; Remedies
Default includes failure to pay, misrepresentation, insolvency, or covenant breach. Lender may accelerate and exercise lawful remedies, including collection costs where permitted. A cure window of [X] days may be provided if stated here: [Cure Terms].
8. Party Assurances
Each Party confirms authority and accurate information. Borrower will use funds lawfully; Lender’s funds are lawfully sourced. Independent advice is encouraged for legal/tax matters.
9. Notices and Records
Notices via certified mail or courier to the addresses listed; email copies optional. Maintain records of payments and notices for at least [X] years. Address changes must be reported within [X] days.
10. Governing Law; Venue; ADR
Governing law: [State/Country]; venue: [County/City], [State]. Parties may agree to mediation or arbitration by addendum. Severability and non‑waiver apply.
11. Entire Agreement; Amendments
Entire agreement; supersedes prior understandings. Changes must be in a signed writing. If any provision is invalid, remaining provisions continue in force.
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 Template – Illinois
Illinois Personal Loan Agreement FAQ
What is a Personal Loan Agreement?
A Personal Loan Agreement is a legally binding contract between a lender and a borrower that outlines the key terms of a loan, including the loan amount, interest rate, repayment schedule, and any applicable fees or penalties. The agreement protects both parties by clearly defining their rights and obligations, helping to prevent future disputes or misunderstandings.
Essentially, it sets out all the important details of how the loan will be repaid and under what conditions. Reviewing the terms carefully before signing — especially the interest rate, repayment timeline, and any late payment clauses — can help you avoid unexpected costs or issues later.
When to use a Personal Loan Agreement?
A Personal Loan Agreement should be used whenever money is being lent between two parties — whether between friends, family members, or through a business or financial institution. It’s especially important when the loan involves a significant amount of money, has repayment terms over time, or includes interest or collateral.
The agreement helps prevent misunderstandings by clearly outlining how much is being borrowed, when it must be repaid, and under what conditions. It’s also useful as legal proof of the debt, protecting both the lender and the borrower if any disputes arise later.
What should be included in a Personal Loan Agreement?
A Personal Loan Agreement should clearly outline all the terms and conditions of the loan to protect both the borrower and the lender. While simple loans may only require a promissory note, more detailed agreements should include the following key elements:
Identifications: Full names and addresses of the lender and borrower.
Effective dates: The start date of the agreement and any other important deadlines.
Loan amount: The total sum being borrowed (the principal).
Collateral: If the loan is secured, specify the asset pledged as security.
Interest rate: The cost of borrowing, whether fixed or variable. Any fees or additional costs should be stated, often reflected as an APR (Annual Percentage Rate).
Repayment schedule: How and when payments will be made — including frequency and duration.
Penalties: Details of late payment fees or consequences of default.
Jurisdiction: The state or area whose laws will govern the agreement.
Severability clause: Ensures that if one part of the contract is invalid, the rest remains enforceable.
Entire agreement clause: States that the written contract represents the full understanding between both parties.
Signatures: Both parties must sign and date the agreement for it to be legally binding.
Having these sections clearly written helps prevent confusion and ensures that both sides understand their rights and responsibilities from the start.
Can a Personal Loan Agreement be changed after signing?
Yes, a Personal Loan Agreement can be changed after signing, but only if both the lender and the borrower agree to the modifications. Any changes — such as adjustments to the repayment schedule, interest rate, or loan amount — must be made in writing through an official amendment or addendum to the original agreement.
Both parties should sign and date the amendment for it to become legally valid. Verbal changes or informal agreements are not enforceable and can lead to misunderstandings or legal disputes. Keeping all modifications clearly documented helps ensure transparency, protects both parties, and maintains the integrity of the original contract.
What happens if the borrower declares bankruptcy?
If a borrower declares bankruptcy, the Personal Loan Agreement becomes part of the bankruptcy proceedings. This means the lender may no longer collect payments directly, as all debts are reviewed and managed by the bankruptcy court. Depending on the type of bankruptcy filed, the debt may be restructured, reduced, or discharged entirely.
Secured loans (backed by collateral) may allow the lender to recover the asset, while unsecured loans are usually paid only if the borrower’s remaining assets are distributed by the court. It’s important for lenders to file a proof of claim in the bankruptcy case to preserve their right to repayment.
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