A personal loan agreement is a written contract between two individuals who agree to lend and borrow money from each other.
It is important to have a clear and detailed loan agreement in place to protect both the lender and the borrower and to ensure that all terms of the loan are understood and agreed upon.
Here are samples of how you might write a personal loan agreement between friends:
Sample 1 - Personal Loan Agreement Letter Between Friends
[Date]
Loan Agreement
This Loan Agreement (the “Agreement”) is made and entered into by and between [Lender’s name] (the “Lender”) and [Borrower’s name] (the “Borrower”) on the date listed above.
Purpose of Loan: The Borrower is borrowing [amount] from the Lender for the purpose of [purpose of loan].
Repayment: The Borrower agrees to repay the loan in full, with interest, by [repayment date]. The interest rate for this loan will be [interest rate]% per year.
Default: If the Borrower fails to make a payment by the due date, the Lender may demand immediate repayment of the entire loan balance.
Governing Law: This Agreement shall be governed by the laws of the state of [state].
Signatures:
[Lender’s name]
[Borrower’s name]
Note: In addition to the above structure, you may also want to include information about any collateral that the borrower is offering in exchange for the loan, as well as any other terms or conditions of the loan.
It is also a good idea to have the loan agreement reviewed by a lawyer to ensure that it is legally binding.
Sample 2 - Personal Loan Agreement Letter Between Friends
Sarah Brown (borrower)
Tammy Smith (lender)
Original Loan Date: March 25, 2021
Entire Repayment Due: March 25, 2022
Total Amount of Loan: $2,500
TERMS OF LOAN AGREEMENT LETTER:
I, Sarah Brown, borrowed $2,500 from Tammy Smith on March 25, 2021. Tammy Smith and I both agree that the loan will be repaid using a series of scheduled financial payments.
I, Sarah Brown, will submit a monthly payment due on the 1st of every month using a personal check in the amount of $104.20 to Tammy Smith. The first payment will be made on March 25, 2021 and the last payment will be made on March 25, 2022.
I, Sarah Brown, agree to a $5 late charge per day for any payments that are late until the entire loan is paid in full on March 25, 2022.
Both parties agree to the terms surrounding the said loan.
Signed and dated today on March 25, 2021.
(Sarah Brown’s signature)
Sarah Brown
(Tammy Smith’s signature)
Tammy Smith
Sarah Brown
2130 Lucky Rd.
Dixon, MD 20009
sarahbrown@gmail.com
(454) 815-8444
Tammy Smith
1908 Morris Rd.
Dixon, MD 20008
tammysmith@gmail.com
(454) 805-7523
Mary Benson (third-party witness)
Trust and Loan Bank representative
428 South Ave.
Dixon, MD 20007
(604) 895-4147
Sample 3 - Personal Loan Agreement Letter Between Friends
Andrew Jones (borrower)
Ben Bradley (lender)
Original Loan Date: April 2, 2021
Entire Repayment Due: May 2, 2022
Total Amount of Loan: $2,500
TERMS OF LOAN AGREEMENT LETTER:
I, Andrew Jones, borrowed $2,500 from Ben Bradley on April 2, 2021. I will repay the loan in one lump sum when I receive my income tax refund
I, Andrew Jones, promise to repay Ben Bradley the entire amount of $2,500, using a personal check on May 2, 2022.
I also agree to pay a $5 late fee per day if I fail to make the agreed upon one lump payment on May 2, 2022.
(Andrew Jones’ Signature)
Andrew Jones
(Ben Bradley’s Signature)
Ben Bradley
Andrew Jones
3100 Dusty Rd.
New Brunswick, NJ 64856
andrewjones@gmail.com
(954) 895-8744
Ben Bradley
1558 Johnson Rd.
New Brunswick, NJ 64856
benbradley@gmail.com
(354) 895-7823
Sample 4 - Personal Loan Agreement Letter 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:
I, Payee Name (“Payee”), borrowed $1,000 from Promisor Name (“Promisor”) on Loan Date. By signing this agreement both Payee and Promisor acknowledge that Payee will pay back Promisor using the following payment schedule.
Payee agrees to repay Promisor with a personal check for $100 on the first of each month for 10 months beginning with January 1, 20__. The last payment will be made October 1, 20__, at which time the loan will be fully repaid.
Payee further agrees to pay a $35 per week late charge for every week that payment is delayed after the first of the month.
This $35 late charge may be prorated as a $5 per day charge for each day that the payment is late for segments of time shorter than seven days.
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 personal loan agreement letter between friends?
A personal loan agreement letter between friends is a legally binding document outlining the terms and conditions of a loan between two individuals who are friends. It should include details such as the loan amount, repayment schedule, and any interest or fees associated with the loan.
2. Why is a personal loan agreement letter between friends important?
A personal loan agreement letter between friends is important because it serves as a written record of the loan terms and can help prevent misunderstandings or disputes between the parties involved. It also establishes a clear repayment plan and can help protect the lender’s financial interests.
3. What should be included in a personal loan agreement letter between friends?
A personal loan agreement letter between friends should include details such as the loan amount, repayment schedule, interest rate (if applicable), late payment fees, and any other terms and conditions associated with the loan. It should also include the names and contact information of both parties involved.
4. How can I enforce a personal loan agreement letter between friends?
If a personal loan agreement letter between friends is not honored by the borrower, the lender can take legal action to enforce the terms of the agreement.
This may include filing a lawsuit in small claims court or seeking assistance from a collection agency. However, it’s always best to try to resolve the issue informally before taking legal action.
5. Can personal loan agreement letter between friends be used in court?
Yes, personal loan agreement letter between friends can be used as evidence in court if a dispute arises.
It serves as a written record of the terms of the loan and can help establish the lender’s legal rights to repayment. It’s important to ensure that the agreement is properly executed and meets all legal requirements.
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