A friend-to-friend loan agreement is made between a borrower and a lender who are both friends. It’s designed to be a straightforward agreement between the parties that spells out the amount borrowed and the terms of repayment.
Learn how to draft a friendship loan arrangement. For your agreement letter, use our sample loan agreement between friends as a template.
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Sample 1 - Loan Agreement Between friends
The undersigned agrees to pay to [Robert and Janet Calhoun] the principal sum of Five thousand, six hundred and seventy five dollars and no cents. [$ 5,675.00] This note also includes interest of six percent [6%].
The principal amount, including interest, is payable in payments as follows: [two hundred and seventy five dollars and no cents ($275.00)] on the 1st day of [MONTH] and one hundred and seventy five dollars and no cents ($175.00) due the 15th of [MONTH] and every month thereafter until this loan is paid in full. All installments are due on the 1st and 15th day of each and every month thereafter until this Note is fully paid.
The only exception is the final payment, if not paid at an earlier date, which will be due on 21st day of [MONTH] in the amount of [thirty nine dollars $39.00]. All payments made will be first applied to interest and then principal balance.
Payments are to be by mailing to [ADDRESS]. The lenders reserve the right to change the address in writing if necessary. It may become necessary for the lenders to secure the amount of said note.
The undersigned agrees that this note may be revocable due to non-payment of any collection costs, such as court, and other collection activities will be added to the balance.
Should the lender exercise this option, the entire unpaid balance of the loan and interest becomes due and payable immediately. Reasonable collection activities may include attorney fees and obtaining a judgment.
By signing this document, both parties agree to the terms and guidelines laid forth.
___________________________
Borrower
___________________________
Borrower
____________________________
Lender
____________________________
Lender
Sample 2 - Loan Agreement Between friends
Full, legal name of Payee
Full, legal name of Promisor
Loan Date
Total Amount of Loan
Final Due Date for Repayment
Agreement Terms:
On Loan Date, I, Payee Name (“Payee”), borrowed $1,000 from Promisor Name (“Promisor”). By signing this agreement, Payee and Promisor agree that Payee will repay Promisor according to the payment schedule below.
Beginning January 1, 20__, Payee undertakes to return Promisor with a personal check for $100 on the first of each month for a period of ten months. The final payment will be made on October 1, 20__, and the debt will be entirely returned at that time.
The payee also agrees to pay a $35 late fee for each week that payment is late after the first of the month. For periods of less than seven days, the $35 late fee may be prorated as a $5 per day charge for each day the payment is late.
Both Payee and Promisor agree to the payment agreement defined above.
Signed:
Signature of Payee with Date
Signature of Promisor with Date
Signature of Witness or Notary with Date
Frequently Asked Questions (FAQs)
1. What is a Loan Agreement between friends?
Answer: A Loan Agreement between friends is a written agreement between two parties, where one party (the lender) agrees to lend a specific amount of money to the other party (the borrower) with the understanding that the borrower will repay the loan, along with any agreed upon interest, at a later date.2. Why is a Loan Agreement important between friends?
Answer: Having a Loan Agreement between friends is important because it sets clear terms and expectations for the loan, including the amount of the loan, the interest rate, the repayment schedule, and any other terms that may be relevant to the loan.This can help to avoid misunderstandings and disagreements between the lender and borrower in the future.
3. What should be included in a Loan Agreement between friends?
Answer: A Loan Agreement between friends should include the names and contact information of the lender and borrower, the amount of the loan, the interest rate, the repayment schedule, any collateral that may be used to secure the loan, and any other terms or conditions that may be relevant to the loan.4. Is it necessary to have a Loan Agreement witnessed or notarized?
Answer: While it is not legally required for a Loan Agreement between friends to be witnessed or notarized, it may be a good idea to have the agreement signed in the presence of a neutral third party or to have it notarized.This can provide additional protection and evidence in the event that there is a dispute regarding the loan in the future.
5. What happens if the borrower is unable to repay the loan as agreed?
Answer: If the borrower is unable to repay the loan as agreed, the lender may take legal action to recover the debt, such as by hiring a collection agency or taking the borrower to court.In some cases, the lender may also be able to seize any collateral that was used to secure the loan.
6. Can a Loan Agreement between friends be cancelled or modified?
Answer: Yes, a Loan Agreement between friends can be cancelled or modified if both the lender and borrower agree to the changes.It is important to put any changes to the agreement in writing and to have both parties sign and date the revised agreement.
