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Unsecured Loan Agreement Template
Put unsecured loan terms in writing so both lender and borrower clearly understand their obligations.
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Unsecured Loan Agreement Template
This Unsecured Loan Agreement (“Agreement”) is made as of [Date of Agreement].
1. Parties
Lender:
Full Legal Name: [Lender Full Legal Name]
Business Name (if applicable): [Lender Business Name]
Address: [Street Address, City, State/Province, ZIP/Postal Code, Country]
Phone: [Lender Phone Number]
Email: [Lender Email Address]
Borrower:
Full Legal Name: [Borrower Full Legal Name]
Business Name (if applicable): [Borrower Business Name]
Address: [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: [Short description, e.g., “working capital,” “debt consolidation,” “home improvement”]
The parties agree that this is an unsecured loan and no collateral is pledged as security.
3. Disbursement of Loan
Disbursement Date: [MM/DD/YYYY]
Method of Disbursement: [Bank transfer / Check / Other]
Recipient Account or Payee Details: [Account Name and Details or Payee Information]
Borrower acknowledges receipt of the Loan Amount (or will acknowledge upon disbursement) and agrees to repay it according to this Agreement.
4. Interest
Interest Rate: [Annual Interest Rate %] per year
Interest Type: [Simple interest / Other]
Interest Start Date: [Date from which interest begins to accrue]
Interest will be calculated on the outstanding principal balance until the loan is repaid in full, unless otherwise stated here: [Additional interest terms, if any].
If the parties agree to a zero-interest loan, insert:
Interest Rate: 0% (no interest will be charged on the loan).
5. Repayment Terms
Choose one structure and complete the details.
5.1 Installment Payments
Number of Installments: [Number]
Installment Amount: [Amount per installment]
Payment Frequency: [Monthly / Quarterly / Other]
First Payment Due Date: [MM/DD/YYYY]
Subsequent Payments: [e.g., “Due on the same day of each following month”]
OR
5.2 Single Lump-Sum Payment
Total Amount Due at Maturity (principal plus interest, if any): [Amount]
Maturity Date (Final Due Date): [MM/DD/YYYY]
OR
5.3 Custom Schedule
Repayment Schedule: [Describe schedule briefly or reference “See attached repayment schedule dated [Date]”]
Unless otherwise agreed in writing, each payment will be applied first to any accrued but unpaid interest and then to principal.
6. Method of Payment
Currency: [Currency]
Payment Method: [Bank transfer / Check / Other]
Payment Details:
Payee / Account Name: [Name]
Bank / Institution: [Bank Name]
Account Number / IBAN: [Account Number]
Reference to Include: [Reference text]
7. Early Repayment
Borrower may prepay the loan, in whole or in part, at any time without penalty, unless specified otherwise here: [Prepayment conditions, if any].
Any prepayment will first be applied to accrued interest (if applicable) and then to principal.
8. Late Payment and Default
Late Payment:
A payment is considered late if it is not received within [Number] calendar days after the scheduled due date.
Late Fee (if any): [Currency and Amount or Percentage, or “No late fee will be charged.”]
Default:
Borrower will be in default if:
Borrower fails to pay any amount due under this Agreement within [Number] days after written notice of non-payment; or
Borrower otherwise materially breaches this Agreement and does not correct the breach within [Number] days after written notice.
Upon default, and subject to applicable law, Lender may:
Declare the entire remaining balance of principal and accrued interest immediately due and payable; and
Pursue available legal remedies to recover amounts owed, including reasonable collection costs if allowed by law and agreed here: [Collection cost terms, if any].
9. Unsecured Nature of Loan
This is an unsecured loan. No specific property of Borrower is pledged as collateral.
Lender’s rights are limited to enforcing this Agreement and applicable law. Lender does not obtain any ownership interest in Borrower’s property by entering into this Agreement.
10. Representations and Warranties
Each party represents and warrants that:
They have the legal capacity and authority to enter into this Agreement.
They have read and understood the terms of this Agreement.
They are entering into this Agreement voluntarily and not under duress.
Borrower additionally represents that:
The information provided to Lender regarding Borrower’s identity and contact details is accurate.
Borrower intends to repay the loan according to the agreed terms.
11. Tax and Legal Considerations
Each party is responsible for their own tax, accounting, and legal compliance in connection with this loan, including any reporting obligations or tax on interest income.
For larger or more complex loans, the parties may seek independent professional advice before signing this Agreement.
12. Amendments and Waivers
Any amendment or change to this Agreement must be in writing and signed by both Lender and Borrower.
The failure of either party to enforce any provision of this Agreement at any time does not waive that provision or the right to enforce it later.
13. Notices
All notices under this Agreement must be in writing and sent to the contact details listed in Section 1, unless a party provides updated details in writing.
Permitted notice methods:
Personal delivery;
Mail or courier;
Email (if both parties use email regularly and agree to receive notices electronically).
14. Governing Law
This Agreement is governed by the laws of [State/Province, Country], without giving effect to conflict-of-law principles, unless the parties state a different governing law here: [Alternative Governing Law, if any].
15. Entire Agreement
This Agreement contains the entire understanding between Lender and Borrower regarding this unsecured loan and replaces any prior oral or written discussions or agreements relating to this specific loan.
16. Signatures
By signing below, the parties agree to be bound by the terms of this Unsecured Loan Agreement.
Lender:
Signature: _______________________________
Printed Name: [Lender Full Legal Name]
Title (if signing for a business): [Title]
Date: [MM/DD/YYYY]
Borrower:
Signature: _______________________________
Printed Name: [Borrower Full Legal Name]
Title (if signing for a business): [Title]
Date: [MM/DD/YYYY]
Witnesses (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 (If Required)
State/Province of [State/Province]
County of [County]
On [Date], before me, [Notary Full Name], a Notary Public, personally appeared [Lender Full Legal Name] and [Borrower Full Legal Name], who proved their identities on the basis of satisfactory evidence, and they acknowledged that they executed this Unsecured Loan Agreement for the purposes stated in it.
Notary Public Signature: _______________________________
Notary Public Printed Name: [Notary Full Name]
My Commission Expires: [Date]
Notary Seal: ☐
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Unsecured Loan Agreement Template
UNSECURED LOAN AGREEMENT TEMPLATE FAQ
What is an unsecured loan agreement?
An unsecured loan agreement is a written contract where a lender provides money to a borrower without requiring collateral. The borrower agrees to repay the loan on specific terms, but no specific asset (such as a car or house) is pledged as security for the loan.
When should I use an unsecured loan agreement?
Use an unsecured loan agreement when one person or business is lending money to another, no collateral is being pledged, and both parties want the terms—amount, interest, repayment schedule, and consequences of non-payment — clearly documented in writing.
What should an unsecured loan agreement include?
A clear unsecured loan agreement usually includes: full names and contact details of the parties, the loan amount, disbursement method, interest rate (if any), repayment schedule, late payment and default rules, any rights to early repayment, governing law, and signatures.
Is collateral required for an unsecured loan?
No. By definition, an unsecured loan does not require collateral. The lender relies on the borrower’s promise to repay and, if necessary, legal enforcement of the agreement. For larger or higher-risk loans, some lenders may instead prefer a secured loan with collateral.
Is an unsecured loan agreement legally binding?
A properly drafted and signed unsecured loan agreement can be legally binding if it meets contract requirements under local law (such as offer, acceptance, consideration, and capacity). For significant loan amounts or complex situations, it may be wise to have a qualified professional review the document.
Can AI Lawyer help me customize this Unsecured Loan Agreement?
Yes. AI Lawyer can help you adjust this Unsecured Loan Agreement template with your names, loan amount, interest rate, repayment schedule, and other key terms so you have a clear, organized document ready for review and signature.
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