Personal Loan Agreement Template PDF

‘Sample Personal Loan Agreement’ PDF Quick download link is given at the bottom of this article. You can see the PDF demo, size of the PDF, page numbers, and direct download Free PDF of ‘Printable Personal Loan Agreement’ using the download button.

Personal Loan Agreement Form PDF Free Download

What is a Personal Loan?

A personal loan is a sum of money borrowed by an individual that may be used for any purpose. 

The borrower will be responsible for paying the lender back plus interest. Interest is the cost of a loan and is calculated annually.

The lender may be a bank, financial institution, or an individual – the loan agreement will be legally binding in either case.

When to use a loan agreement

Whether you’re an individual trying to offer financial aid to a friend or a company that’s lending a business partner money, it’s always best practice to use a loan contract template early in your financial dealings.

As soon as a stakeholder asks if they could borrow money, or if you willingly offer to loan funds, it’s time to reference a loan contract.

You may have preliminary discussions to screen your potential borrower about when to repay your loan and on what terms, but don’t go ahead and transfer any money until all parties have reviewed and signed a personal loan agreement.

Presenting your loan agreement form early will help borrowers decide if they’re in a position to enter such an agreement.

Personal Loan vs. Line of Credit

The main difference is the personal loan must be paid back on a certain date and a line of credit offers revolving access to money with no end date.

DifferencePersonal LoanLine of Credit
Payment PeriodSpecific start and end dates.Revolving, no end date.
Collateral Required?No, in most cases.Yes, in most cases.
Interest RateFixed, in most cases.Variable, in most cases.

5 Types of Personal Loans

Co-Sign – When the borrower has bad or no credit and needs someone else to be liable in case they do not pay.

Fixed Rate – The interest rate remains the same during the course of the repayment period.

Secured – The borrower is required to put collateral down in case of default. Often the collateral is a vehicle or a 2nd mortgage put on a home.

Unsecured – The borrower is not required to place collateral as part of the loan agreement. Although, if the borrower does not pay their personal assets may still be confiscated legally.

Variable Rate – When the interest rate is tied to a third-party such as the current Fed Funds Rate.

Important Provisions

This lending contract must include several key provisions:

Loan Amount ($)

Loan Date

Borrower and Lender Information

Interest Rate

Re-Payment Terms

Late Fees (if any)

Default Terms (if the borrower doesn’t pay)

Early Payment Penalty (if any)

Security (collateral)

Law of Governance (State)

Co-Signer (if any)

Assigning Rights

The elements of a great loan agreement

Loan agreements can be long and confusing; however, we’ve found that only a handful of components really matter. Let’s look at some examples below.t.

1. Capturing details

The first step in any quality loan contract is getting the information from both lenders and borrowers in your agreement.

This includes details such as name and contacts, and in the case of borrowers, relevant references, and collateral for security.

Accurate details must be captured in your loan agreements, and we recommend all parties refer to primary photographic identification to verify the correct information.

2. Loan terms

Perhaps the most important part of your loan agreement is documenting the terms of your loan.

This means writing down the start date, loan amount, and interest rate.

Your loan terms form the core of your agreement template, as it’s likely to be the most referenced information on your form.

It’s common practice that lenders take the lead and prefill the loan terms as part of their offer to borrowers.

That way, it’s up to borrowers to decide whether they are willing to accept those loan terms.

3. Repayment schedule

Another crucial element of any loan agreement is stipulating the borrowers’ repayment schedule.

Parties need to agree on how and when payments will be made.

\For example, a lender may decide that repayments are to be made via direct deposit and are due on the 1st of every month.

Of course, these details can be negotiated before signing the contract, in case the borrower has different preferences for payment methods of payment frequency.

4. Late charges

The key to a successful loan agreement is ensuring the borrowers make consistent repayments under the contract.

If borrowers are unable to adhere to the payment schedule, it’s common that lenders to charge a late fee.

Lenders must be clear on when payment becomes late, and how much the penalty is.

5. Signatures

A loan agreement is not legally binding without written consent from the lender and borrower.

Signatures are legal proof that all parties acknowledge and accept the terms of the loan contract.

Language English
No. of Pages4
PDF Size1 MB

Personal Loan Agreement Form PDF Free Download

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