Personal Loan Agreement Template

All states | 6 types
Personal Loan Agreement Page 1
4.7 (33 reviews)
Updated Feb 16, 2024
~ 4 pages
A personal loan agreement solidifies the terms, conditions, rights, and obligations related to the loan, allowing all parties to transfer ownership and rights and satisfy their interests safely. This template provides a structured format that helps set clear expectations, ensuring the agreement is comprehensive, understandable, and legally enforceable. 
Choose your type of this legal template.
Document Types
Family Loan Agreement
This agreement documents the amount borrowed and repayment terms between the parties.
Loan Agreement
This agreement outlines the terms and conditions for borrowing money.
Loan Personal Guarantee Form
This form represents the guarantor's promise, pledging their assurance to satisfy a debt.
Payment (Plan) Agreement
This document outlines the schedule for payments to be made to fulfill a debt.
Shareholder Loan Agreement
This contract details the specifics of a loan between a company and a shareholder.
Paper titled "Personal Loan Agreement"; bank notes, man talking to a woman

While personal loans might seem straightforward, they involve more than simply lending money and expecting it to be paid back. A crucial document comes into the picture to ensure a smooth and formal operation of this lending process: the personal loan agreement. This legal document solidifies the terms, conditions, rights, and obligations related to the loan, allowing all parties to transfer ownership and rights and satisfy their interests safely.

Consider using a personal loan contract template to make this process smoother. These templates provide a structured format that helps set clear expectations, ensuring the agreement is comprehensive, understandable, and legally enforceable. 

When to Use a Personal Loan Agreement

A personal loan contract is necessary whenever a loan is given from one party to another. This can transpire in various instances — perhaps a friend needs financial help, a family member is lending you college tuition, or a small business owner is taking a loan from a relative to fund a business venture. The personal loan agreement between friends or close acquaintances is a legal acknowledgment that the loan terms are agreed upon and understood and that the lender has a claim to repay the provided funds following the set terms in the agreement.


  • Borrower — The individual or entity receives the loan for a specific need or purpose. The borrower is responsible for repaying the loan according to the stipulated terms and conditions in the personal loan document. After fulfilling these terms, typically through scheduled payments, the loan is deemed fully repaid, giving the borrower freedom from the obligation.

  • Lender — This refers to the individual, bank, or other financial institution providing the funds for the borrower's needs. Regarding the simple personal loan agreement, the lender is responsible for confirming that the loan has been completely paid and releasing their claim over the borrower's obligation. Upon doing this, the lender will usually issue a formal document and a statement confirming the same. These documents act as a lawful affirmation of the loan's satisfaction and are generally recorded with necessary authorities if required.

Key Terms

  • Principal amount: The initial quantity the lender is loaning to the borrower. It forms the base, excluding any interest or additional fees.
  • Interest rate: This term refers to the cost of borrowing the principal amount, typically expressed as a yearly percentage of the principal.
  • Repayment period: When a borrower is expected to repay the loan.
  • Payment schedule: This outlines specific repayment due dates, enabling the borrower to prepare and the lender to anticipate the returns.
  • Default: This term defines a breach of the personal loan agreement form, such as late repayment or non-payment, and its consequences.

How to Write a Personal Loan Agreement

Creating the personal loan forms requires careful consideration of all necessary terms and conditions that would protect both parties involved. It's essential to ensure that every term is well explained and understood by all parties to maintain transparency and mutual understanding throughout the loan period.

Utilizing a personal loan template can be incredibly helpful in making this process easier. This template serves as a solid starting point, providing a guideline that ensures all necessary components are included and structured correctly. Working from a personal loan agreement PDF ensures a comprehensive and legally sound agreement, reducing the likelihood of misunderstandings or discrepancies.

Here's a step-by-step guide to creating the document:

  1. Identification of parties: Identify the “borrower” and the “lender.” Include full names and addresses. For example, you can use a personal loan agreement template free of charge.

  2. Principal amount: List the total amount of money being loaned. This amount does not include any interest that might accrue over the repayment period.

  3. Interest rate: Use the personal loan agreement template to delineate the interest rate applied to the loan. This can be a flat rate or an accumulated one over time. Specify how the interest is calculated and when it is added to the outstanding loan balance.

  4. Repayment schedule: Detail the agreed-upon repayment plan. This should include the date of the first payment, the number of payments to be made, and the amount of each payment.

  5. Late charges: Convey the policy regarding late payments with a sample personal loan agreement. Indicate when a payment is considered overdue and the charges associated with late fees.

  6. Loan default: Define what constitutes a default on the loan, like missing multiple payments, and the steps to take if the default occurs.

  7. Signatures: Both parties must sign and date the agreement to be enforceable.

A well-crafted personal loan document template offers a safer means to lend and borrow money between two parties. It ensures clarity, legal validity, and a resolution method for disagreements or breaches. With many customizable personal loan agreement samples and templates available, creating such an agreement has never been easier. We encourage you to leverage these templates but always remember to ensure that every term is understood and agreed upon by all the parties involved.