A Personal Loan Agreement formalizes lending between individuals, whether between family members, friends, or private parties. This template ensures both the lender and borrower have clear, enforceable terms.
What Is a Personal Loan Agreement?
A personal loan agreement (also called a promissory note) is a legally binding document that records the terms of a private loan. It specifies how much money is being lent, the interest rate, the repayment schedule, and the consequences of default.
Key Clauses to Include
- Loan Amount — The principal sum being lent and how it will be disbursed.
- Interest Rate — Annual percentage rate (APR), how interest is calculated, and total interest cost.
- Repayment Schedule — Monthly payments, due dates, and total number of payments.
- Late Penalties — Grace period and late fee amounts.
- Prepayment — Whether the borrower can repay early without penalties.
- Collateral — For secured loans, describe the collateral and the lender’s rights to seize it upon default.
- Default — Define what constitutes default and the lender’s remedies (accelerated repayment, collections, legal action).
- Governing Law — Which state’s laws apply.
How to Customize This Template
- Check usury laws — Maximum interest rates vary by state. Exceeding the limit can void the agreement.
- Consider IRS implications — For family loans, charge at least the Applicable Federal Rate to avoid gift tax issues.
- Include a payment log — Attach an amortization schedule showing each payment and remaining balance.
- Add co-signer terms — If a guarantor is involved, include their obligations.
How to Send for E-Signature with WPsigner
- Upload — Drop this loan agreement into WPsigner
- Add fields — Signature, date, and payment acknowledgment for both parties
- Send — Email secure signing links to lender and borrower
- Track — Confirm both parties have signed
- Store — Archived with tamper-proof audit trails for legal protection