Loan agreement template
Lending to a friend or relative, on paper both of you have signed.
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Example
Example: $4,800 lent to a brother at 3% a year, repaid over 12 months
Pat Example lends Chris Example $4,800 by bank transfer on January 15, 2027, toward a used car. They agree 3% a year and 12 monthly payments from February 15, 2027. Written for: Anywhere (plain English), US dollars, US Letter. The agreement works out the schedule: the same payment every month, each month’s interest charged on what is still owed.
- Amount 4800, handed over January 15, 2027 by bank transfer; repaid in monthly instalments, 12 of them, the first due February 15, 2027; interest 3.
- Each month’s interest is a twelfth of 3% of the balance, rounded to the cent: $12.00 on the full $4,800 in February, down to $1.01 in the last month.
- The payment is $406.53 every month; the last one, $406.49, clears the balance exactly.
| No. | Due | Payment | Principal | Interest | Balance |
|---|---|---|---|---|---|
| 1 | February 15, 2027 | $406.53 | $394.53 | $12.00 | $4,405.47 |
| 2 | March 15, 2027 | $406.53 | $395.52 | $11.01 | $4,009.95 |
| 3 | April 15, 2027 | $406.53 | $396.51 | $10.02 | $3,613.44 |
| 4 | May 15, 2027 | $406.53 | $397.50 | $9.03 | $3,215.94 |
| 5 | June 15, 2027 | $406.53 | $398.49 | $8.04 | $2,817.45 |
| 6 | July 15, 2027 | $406.53 | $399.49 | $7.04 | $2,417.96 |
| 7 | August 15, 2027 | $406.53 | $400.49 | $6.04 | $2,017.47 |
| 8 | September 15, 2027 | $406.53 | $401.49 | $5.04 | $1,615.98 |
| 9 | October 15, 2027 | $406.53 | $402.49 | $4.04 | $1,213.49 |
| 10 | November 15, 2027 | $406.53 | $403.50 | $3.03 | $809.99 |
| 11 | December 15, 2027 | $406.53 | $404.51 | $2.02 | $405.48 |
| 12 | January 15, 2028 | $406.49 | $405.48 | $1.01 | $0.00 |
loan-agreement.pdf, two Letter pages: the amount in figures and words (four thousand eight hundred dollars), six numbered terms, this schedule and lines for both to sign. In all Chris repays $4,878.32, of which $78.32 is interest; with no interest it would be 12 payments of $400.00.
How it works
- Enter the amount, when and how it was paid, and how it will come back: by a date, or in monthly instalments.
- Add an interest rate if there is one; the schedule then shows principal and interest for every month.
- Fill in the lender and the borrower, and anything else you agreed.
- Download, print two copies, and both sign each. Keep one each.
Frequently asked questions
- Is a loan agreement between family members enforceable?
- Yes. Signed by both and with clear terms, it is a contract like any other. A family loan with nothing in writing is much easier to argue was a gift, which is the main reason to write it down.
- Does it need a witness?
- A simple loan agreement does not in the US or the UK, but a witness who saw you both sign makes it harder to deny later. Put them in the witnesses box and a signature block appears for each.
- What if the borrower stops paying?
- With monthly repayment, the agreement lets the lender demand the whole balance in writing once a payment is more than 14 days late. After that the usual route is a formal demand letter and then a small-claims court.
- Do I have to charge interest?
- Not for the agreement to be valid. In the US an interest-free family loan of more than $10,000 can have gift-tax consequences; for larger sums check the applicable federal rate or ask an accountant.
- How is the monthly payment worked out?
- As a fixed payment, the way a bank loan is: each month the interest is a twelfth of the yearly rate on the balance still owed, the rest of the payment goes to the principal, and the last payment is adjusted to the cent so the balance ends at zero. With no interest, the amount is simply divided by the number of payments.
- Is what I type uploaded?
- No. The PDF is made in your browser and nothing you type leaves your device. Nothing of ours is printed on the paper.
- Is this legal advice?
- No. It is a form. For a large sum, or a loan you expect to be difficult, talk to a lawyer.