Personal loan agreement template
A personal loan agreement turns a favor between family or friends into terms both people can live with: how much, when the money changes hands, what it's for, the interest, the repayment schedule and what happens if life gets in the way. This template covers all of that, plus optional collateral and early payoff. Read it below, then fill it in together and both sign.
Updated November 5, 2026 · 3 min read
The contract
Gray blanks are yours to fill in before you send. Each signer fills in the blanks in their color.
- You, before sending
- Borrower
- Lender
Personal Loan Agreement
This Personal Loan Agreement (the "Agreement") is made on Agreement date between Lender name, of Lender address (the "Lender"), and Borrower name, of Borrower address (the "Borrower").
1. The loan
The Lender agrees to lend the Borrower Loan amount (the "Loan"). The Lender will pay the Loan to the Borrower by Payout method on or before Payout date. The Borrower will confirm in writing, a text or email is enough, when the money arrives. This is a loan, not a gift, and the Borrower will repay it as this Agreement says.
2. Purpose
The Borrower will use the Loan for: Loan purpose. If no purpose is written here, the Borrower may use the Loan for any lawful purpose.
3. Interest
The unpaid balance accrues simple interest at Interest rate percent per year from the payout date. If the rate is zero, the Loan is interest-free. Interest will never exceed the highest rate the law allows, and any excess will be credited to the balance.
4. Repayment
The Borrower will repay the Loan, with interest, in monthly payments of Monthly payment, starting on First payment date, by Payment method. Any balance left is due in full on Final payment date. Each payment goes first to interest and then to the balance. Either party can ask the other for a written statement of what has been paid and what remains.
5. Paying early
The Borrower may repay all or part of the Loan at any time with no penalty. Interest stops on any amount repaid early.
6. Missed payments
If a payment is more than Grace period in days days late, the Lender will remind the Borrower in writing. If the Borrower is having trouble paying, the Lender and Borrower will first try to agree a new schedule, which they will put in writing and both sign. If a payment is still unpaid Days before full balance is due days after the reminder and no new schedule has been agreed, the Lender may declare the whole unpaid balance due at once.
7. Collateral (optional)
To secure the Loan, the Borrower pledges: Collateral. If this is left blank, the Loan is unsecured. If collateral is described, the Borrower will keep it insured and in good condition and will not sell it without the Lender's written consent until the Loan is repaid. Any right to take the collateral after a default is subject to the law, which may require a court order and further paperwork, such as noting the Lender's lien on a vehicle title.
8. If either party dies
If the Lender dies, the unpaid balance is owed to the Lender's estate, unless the Lender has forgiven it in a signed writing. If the Borrower dies, the unpaid balance is a debt of the Borrower's estate.
9. General terms
This Agreement is the whole agreement about the Loan. It can be changed only in writing signed by both parties. If any part is unenforceable, the rest stays in effect. It is governed by the laws of the state of State, and may be signed electronically. When the Loan is fully repaid, the Lender will confirm it in writing and release any collateral.
Borrower phone: Borrower phone
I understand this money is a loan, not a gift, and I agree to repay it on the schedule above.
Borrower
Lender
Opens it in SignMaster as a template you can edit and send.
A starting point, not legal advice. Have a lawyer review it for your state and situation.
On this page
Why write down a loan to someone you trust
Loans between people who know each other go wrong in a particular way: nobody wants to mention the missed payment, and by the time someone does, both remember the deal differently. Writing it down protects the relationship as much as the money. It also matters for taxes and estates: if the lender dies, the agreement shows the executor it was a loan, not a gift, and how much is still owed.
Use it for a loan to a relative for a car or a home deposit, money lent to a friend's new business, or a loan between partners or roommates. If a bank, a landlord or a court will ever see the loan, a written agreement is close to essential.
What the template covers
- Amount and handover: how much, when the lender pays it, and how.
- Purpose: what the money is for, if that matters to either of you.
- Interest: a rate, or none, within your state's legal limit.
- Repayment schedule: a monthly payment, a first payment date and a final date.
- Early payoff: allowed at any time, with no penalty.
- Missed payments: a grace period, a written reminder, and a chance to agree a new schedule before anything harsher.
- Collateral, if any: an item the borrower pledges, such as a car, described in its own blank.
- If either of you dies: the balance is owed to or by the estate, unless the lender forgives it in writing.
Mistakes to avoid
- Not deciding whether it's a loan or a gift. If you'd be fine never seeing the money again, say so now; a gift has its own tax rules.
- Skipping interest without thinking. Interest-free loans are fine for small sums, but large ones can have tax consequences under the IRS's below-market loan rules.
- Pledging collateral vaguely. "The car" isn't enough; describe it with its VIN or serial number, and know that taking it may still need a court.
- No plan for hard times. A clause that lets you pause or reschedule by written agreement keeps the conversation calm.
- Handing over cash with no record. Use a bank transfer or check for the loan and for each payment, so you both have proof.
How to sign it with SignMaster
- 1
Open the template
Choose Use this template above. The borrower signs first, and the lender signs after them.
- 2
Agree the numbers, then fill them in
Settle the amount, rate, payment and dates together, then type them into the gray blanks. The borrower adds their own address and phone when they sign.
- 3
Sign wherever you are
Family across the country? Email the link; it opens on any phone. At the same table? Use Sign in person and pass one phone between you.
- 4
Keep the record
Both of you get the signed PDF and its certificate of completion. File it with the bank records of the loan and each payment.
The template doesn't work out a payment schedule for you. Calculate the monthly payment first with a loan calculator or the PMT function in a spreadsheet, and check that the payments cover the principal plus interest before you send.
Questions? Answers.
Is a loan agreement between family members legally binding?
Yes, if it has the basics: an amount, a promise to repay and both signatures. Courts sometimes presume money between relatives was a gift, which is exactly why a signed agreement helps.
Do I have to charge interest on a family loan?
No, but for larger loans the IRS may treat the interest you didn't charge as if it had been paid. Charging at least the applicable federal rate avoids that; ask a tax adviser about your amount.
Can I e-sign a personal loan agreement?
Generally, yes. The ESIGN Act and state UETA laws cover ordinary contracts, loans between individuals included. See can you e-sign a loan agreement for the exceptions.
How is this different from a promissory note?
A promissory note is the borrower's one-sided promise to pay. This agreement is two-sided: it also covers when the lender hands over the money, what it's for and any collateral. Some people sign both.