3 Must-Have Templates for Borrowing Money From Friends

Drafting a contract for borrowing money from a friend requires careful consideration to ensure clarity, mutual understanding, and legal soundness. Here are three detailed templates that can be adapted to fit specific needs:

Template 1: Simple Loan Agreement Between Friends





Date: [Insert Date]

Parties:

  • Lender: [Lender’s Full Name], residing at [Lender’s Address]
  • Borrower: [Borrower’s Full Name], residing at [Borrower’s Address]

Recitals:
The Lender agrees to lend [Loan Amount] to the Borrower, and the Borrower agrees to repay this loan to the Lender, adhering to the terms and conditions stated below.

Terms and Conditions:

  1. Loan Amount: The total loan amount is [Loan Amount], which will be paid to the Borrower on [Loan Distribution Date].
  2. Repayment: The Borrower agrees to repay the total loan amount along with any agreed interest by [Final Repayment Date]. Payments will be made as follows: [Repayment Schedule].
  3. Interest: [If applicable] The loan will carry an interest rate of [Interest Rate]% per annum.
  4. Prepayment: The Borrower may repay the loan in full or in part at any time before the due date without penalty.
  5. Late Payment: If any payment is more than [Number of Days Late] days late, a late fee of [Late Fee Amount] will be applied.
  6. Default: In the event of default, the Lender has the right to demand immediate repayment of the remaining loan balance and interest.
  7. Governing Law: This agreement shall be governed by the laws of [State/Country].
  8. Amendment: Any changes to this agreement must be in writing and signed by both parties.
  9. Signatures: Both parties acknowledge understanding and agreement of the terms outlined above.

Signatures:

[Lender’s Signature] ___________________ Date: ___________

[Borrower’s Signature] ___________________ Date: ___________

Template 2: Detailed Loan Agreement With Guarantor

Date: [Insert Date]

Parties:

  • Lender: [Lender’s Name], residing at [Lender’s Address]
  • Borrower: [Borrower’s Name], residing at [Borrower’s Address]
  • Guarantor: [Guarantor’s Name], residing at [Guarantor’s Address] (If applicable)

Recitals:
The Lender agrees to lend [Loan Amount] to the Borrower under the conditions stipulated herein, which the Borrower agrees to repay.

Terms and Conditions:

  1. Loan Amount and Disbursement: The Lender shall provide the Borrower with a loan amount of [Loan Amount], which will be disbursed on [Disbursement Date].
  2. Repayment Terms: The Borrower is obligated to repay the loan in [Number of Payments] payments of [Payment Amount], starting on [Start Date] and ending on [End Date].
  3. Interest Rate: The annual interest rate on the loan amount is [Interest Rate]%.
  4. Security/Guarantor: [If applicable] As security for this loan, [Guarantor’s Name] agrees to serve as a guarantor.
  5. Default Terms: In case of default, the Lender may require immediate repayment of the loan and any accrued interest.
  6. Legal Fees: In the event of a dispute, the losing party will be responsible for the winning party’s legal fees.
  7. Jurisdiction: This contract is governed by the laws of [Jurisdiction].
  8. Complete Agreement: This document represents the full agreement between the parties.

Signatures:

[Lender’s Signature] ___________________ Date: ___________

[Borrower’s Signature] ___________________ Date: ___________

[Guarantor’s Signature] ___________________ Date: ___________ (If applicable)

Template 3: Installment Loan Agreement With Interest and Collateral

Date: [Insert Date]

Parties:

  • Lender: [Lender’s Full Name], residing at [Address]
  • Borrower: [Borrower’s Full Name], residing at [Address]

Recitals:
This Agreement outlines the loan of [Loan Amount], which the Borrower agrees to repay in installments to the Lender under the terms described below.

Terms and Conditions:

  1. Loan Amount & Distribution: The Lender agrees to loan [Loan Amount] to the Borrower on [Distribution Date].
  2. Repayment Plan: The Borrower shall repay the loan in monthly installments of [Monthly Payment Amount] starting from [First Payment Date] and ending on [Last Payment Date].
  3. Interest Rate: An annual interest rate of [Interest Rate]% will be applied to the unpaid loan balance.
  4. Collateral: The Borrower agrees to pledge [Description of Collateral] as collateral against the loan.
  5. Late Payment: Payments received after [Days Late] days will incur a late fee of [Late Fee].
  6. Default and Acceleration: Upon default, the Lender may demand the immediate payment of the outstanding balance and interest.
  7. Governing Law: This agreement shall be governed under the laws of [State/Country].
  8. Modification: Changes to this agreement are valid only if agreed in writing by both parties.
  9. Entire Agreement: This document constitutes the entire agreement between the parties.

Signatures:

[Lender’s Signature] ___________________ Date: ___________

[Borrower’s Signature] ___________________ Date: ___________

It’s important to note that these templates should be reviewed by a legal professional to ensure they meet all legal requirements and are appropriate for the specific circumstances of the loan.

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