How to write a personal loan contract

Written by george lawrence
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How to write a personal loan contract
Write your personal loan contract so that it encompasses every aspect of the deal. (form -3 image by Rog999 from

Contracts are simply evidence of an agreement between two people. Contracts set forth each person's responsibilities and describe what, if anything, should happen if one person fails to live up to terms in the agreement. Personal loan contracts detail critical information about the loan. As with other contracts, a personal loan contract should be written in clear and concise language. The drafter should use "plain English" and avoid legalese.

Skill level:


  1. 1

    Title the document "Personal Loan Contract Between [Party A's Name] and [Party B's Name]." Under the title, write "On [date], [Party A's Name] (hereinafter "Lender") loaned to [Party B's Name] (hereinafter "Debtor") the sum of [loan amount]. The parties agree as follows:"

  2. 2

    Discuss the loan amount, interest (if any), and late fees. Even though you stated the loan amount above, include a specific section in the contract describing it in a bit more detail. Discuss interest on the loan (if any); note that you need to check your state's usury laws to avoid charging an illegal interest rate (these vary from state to state).

  3. 3

    Explain when the loan needs to be repaid. Describe a schedule for payments (such as weekly or monthly) or give a hard date (such as "must be paid in full by [date]").

  4. 4

    Write about the consequences for failing to pay the loan. Consider using an "acceleration clause" (meaning that if the debtor misses a payment, the lender can require the loan to be paid in full immediately).

  5. 5

    Sign and date the agreement. Provide a copy to the debtor and keep a copy for your records.

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