Personal Loan Agreement Template
Lending to a friend without paperwork rarely ends well. Write the amount, interest, and repayment dates into a personal loan agreement template while goodwill is still intact.
Customize & DownloadPersonal Loan Agreement Template Sample
This Personal Loan Agreement is entered into as of [1. Effective Date] by and between [2. Lender Full Name] (the “Lender”) and [3. Borrower Full Name] (the “Borrower”).
1. Loan Amount.
The Lender agrees to lend the Borrower the principal amount of [4. Loan Amount], which the Borrower acknowledges receipt of in full on [5. Disbursement Date] by [6. Disbursement Method].
2. Interest.
The principal shall accrue interest at the rate of [7. Interest Rate] percent per annum, calculated on the outstanding principal balance from the date of disbursement. The parties confirm this rate is within the legal limit permitted by the State of [8. State].
3. Repayment.
The Borrower shall repay the loan in [9. Payment Frequency] installments of [10. Installment Amount] each, beginning on [11. First Payment Date] and continuing on the same day of each payment period until the principal and all accrued interest are paid in full. The final payment shall be due on [12. Final Payment Date]. Payments shall be applied first to accrued interest and then to principal.
4. Late Payment.
If any installment is not paid within [13. Grace Period] days of its due date, the Borrower shall pay a late fee of [14. Late Fee] for each late payment. The late fee is in addition to, and not in lieu of, the interest that continues to accrue.
5. Default.
The Borrower shall be in default if any payment remains unpaid for more than [15. Default Period] days. Upon default, the Lender may declare the entire outstanding principal and accrued interest immediately due and payable, and may pursue any remedy available at law or in equity.
6. Prepayment.
The Borrower may prepay all or part of the outstanding balance at any time without penalty. Any prepayment shall be applied to principal after first satisfying accrued interest.
7. Personal Guarantee.
The Borrower personally guarantees the full repayment of the loan. If the Borrower fails to repay, the Lender may pursue collection against the Borrower personally, including through legal action. This loan is [16. Secured or Unsecured]; if secured, the collateral is described as [17. Collateral Description].
8. Miscellaneous.
This Agreement constitutes the entire understanding between the parties and may only be modified in writing. It is governed by the laws of the State of [8. State]. Any dispute arising under this Agreement shall be resolved in the courts of that state.
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What's Included
6 provisionsThis template is provided for informational purposes only and is not legal advice. State usury limits and loan regulations vary; consult an attorney before lending or borrowing.
How to Use
Create the loan document
The agreement follows 2026 private lending practice, structured for loans between individuals.
Enter the loan terms
Add the parties, amount, interest rate, repayment schedule, late fees, and collateral details.
Save the final copy
Preview the agreement and download it as Word or PDF for both parties to keep on file.
Frequently Asked Questions
What is the difference between a personal loan agreement and a promissory note?
A promissory note is the borrower's promise to pay. A personal loan agreement is more detailed — it covers interest, repayment terms, late fees, default, and collateral on both sides.
What interest rate can I charge on a personal loan?
The legal maximum is the state's usury limit, which varies widely. Rates above the cap can make the loan unenforceable, so check your state's limit first.
Should I charge interest on a loan to a friend?
Charging at least the IRS minimum rate avoids imputed interest rules and gift tax issues for large loans. Even a modest rate keeps the loan clearly commercial.
What happens if the borrower does not repay?
After default, the lender can demand the full balance and pursue collection — including a court judgment, wage garnishment, or foreclosure on collateral if secured.
