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Personal Loan Agreement Template – Texas
Define clear loan terms and repayment obligations in Texas 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. Amount and Use
The principal Loan amount is $[Loan Amount]. Use is [Purpose], informational unless restricted in this Agreement. No third‑party broker fees apply unless expressly stated.
2. Disbursement; Proof of Funds
Disbursement on/before [Date] by [ACH/wire/check/cash]; Borrower supplies account info in writing. Lender may request proof of identity prior to funding for verification. Transfer charges are paid by ☐ Lender ☐ Borrower.
3. Interest Option
☐ Interest at [X]% per annum simple interest on unpaid principal. ☐ Interest‑free — no interest will be charged or collected. Interest (if any) accrues from Disbursement Date.
4. Repayment; Amortization; Early Payoff
Payments of $[Amount] are due ☐ Weekly ☐ Monthly starting [Start Date]; maturity [Maturity Date]. Attach an amortization table if helpful; payments apply to fees, interest, then principal. Prepayment is ☐ allowed without penalty ☐ subject to [X]% fee.
5. Late/Returned Payment Handling
Late fee $[Late Fee] after [X] days; returned payment charge $[Return Fee]. Multiple misses may be default per Section 7. Borrower should communicate early about hardships.
6. Collateral (If Any)
☐ Secured by [Collateral]; Borrower grants security interest and will sign necessary filings. ☐ Unsecured — no collateral pledged. Collateral must be free of undisclosed encumbrances.
7. Default; Remedies; Costs
Default includes missed payments, insolvency, misrepresentation, or covenant breach. Upon default, Lender may accelerate and pursue lawful remedies, including recovery of reasonable costs where permitted. Parties agree to consider a brief cure discussion before litigation when practical.
8. Declarations
Borrower affirms lawful purpose and capacity; Lender affirms authority and lawful source of funds. Parties have had the opportunity to seek independent advice. Information provided is accurate to the best of their knowledge.
9. Notices; Records; Changes
Formal notices via certified mail or courier; email copies for convenience. Update addresses within [X] days of changes. Maintain payment records for [X] years.
10. Governing Law; Venue; ADR Option
Governing law is [State/Country]; venue is [County/City], [State]. Optional mediation/arbitration may be elected by signed addendum. Severability and non‑waiver apply.
11. Entire Agreement; Amendments
This document is the complete agreement and supersedes prior discussions. Amendments require written signatures of both Parties. Invalid terms shall be replaced with enforceable terms closest in intent.
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 – Texas
Texas 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.
Can a Personal Loan Agreement include late payment penalties in Texas?
Yes, a Personal Loan Agreement in Texas can include late payment penalties, but they must comply with Texas usury and consumer credit laws. The agreement should clearly state when a payment is considered late, whether there is a grace period, and the exact amount or percentage of the penalty.
In Texas, late fees must be reasonable and proportionate — typically a flat amount or a small percentage of the missed payment. Excessive or hidden fees could be considered unenforceable under state law. For consumer loans, penalties and additional interest charges are regulated to prevent lenders from exceeding the state’s maximum allowable interest rate.
To ensure the agreement remains valid, both parties should clearly agree to the penalty terms in writing, and the lender should avoid imposing any fees not explicitly mentioned in the contract.
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