Customise LawDepot’s Loan Agreement template to suit your needs. Whether you’re creating a loan for a friend or a business, the general structure of your contract will be the same.
Our template includes all the important items that are found in a standard Loan Agreement. Of course, you can add, delete, or edit items as you see fit. When you’re ready, save your document as a PDF or print a copy for your records.
Write your Loan Agreement in four easy steps:
You can use this template whether you’re the borrower or the lender in this agreement. In any case, you should clearly specify the purpose of the loan. For example, common reasons for private lending include:
- Business loans (e.g., capital for a startup)
- Asset purchases (e.g., to finance a vehicle, boat, or furniture)
- Real estate loans (e.g., helping a child make a down payment on a home)
You should also state the location where the loan will occur. Often, people select the lender’s location. But, if the loan is for an asset purchase, you might choose to list the location of the asset instead.
2. Record party details
State the name and address of both the borrower and lender, and specify whether they are an individual or a corporation.
If needed, add the details of a co-signer as well. A co-signer is someone who agrees to accept responsibility for the debt if the borrower defaults. This gives reassurance to the lender, especially if the borrower has a poor credit history.
3. Outline the terms of the loan
State the amount of money the lender will provide to the borrower. There’s no minimum or maximum amount. It’s up to the lender to decide how much they’re willing to lend, although smaller loans may have more flexible terms than larger ones.
In any case, the lender may charge interest to encourage consistent payments. If so, they should specify the percentage of interest and how often it’s compounded (e.g., monthly, every six months, or yearly). Compound interest is based on both the original loan amount and the accumulated interest from previous periods.
The lender may also charge late fees or increase the interest rate to penalize overdue payments. This compensates the lender for the borrower's failure to pay and for the trouble of having to enforce the Loan Agreement.
Remember: if the lender will earn money on the loan, it’s important to consider any related tax implications.
Next, outline the repayment terms, including:
- The repayment schedule
- When the final amount is due
- How repayment is made (e.g., single payment, regular payments, or another flexible option)
- If the borrower can repay the loan early or in lump sums
Finally, if needed, you can state whether the lender requires collateral and/or insurance. This is called a secured loan because the borrower “secures the loan” with collateral such as a vehicle, equipment, or jewellery. If the borrower can’t repay the full loan amount, the lender may seize the collateral. The lender may also require the borrower to obtain insurance if using the loan to buy a vehicle.
4. Add final details as needed
Our template allows you to write your own clause if you feel there’s anything missing from your Loan Agreement. For example, the lender may want to charge a fee if the borrower repays the loan early. We’ll also provide tips on how to write a clause that fits the agreement.
