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Enter the full legal name of this party exactly as it appears on their ID or business registration.
Enter the full legal name of this party exactly as it appears on their ID or business registration.
A Personal Loan Agreement Between Family Members or Friends is the legally binding document that converts an informal personal loan into an enforceable written obligation, protecting both the lender and the borrower. Without a written loan agreement, the IRS may recharacterize a below-market family loan as a gift (triggering gift tax issues), the lender may lose the right to deduct a bad debt if the borrower defaults, and courts may refuse to enforce repayment absent written evidence. This template includes the IRS Applicable Federal Rate (AFR) guidance and a proper default clause. Fill out this free personal loan agreement (family / friends) template online, e-sign it digitally, and download a legally valid PDF. no account or lawyer needed. Sections: Parties, Loan Terms.
This Personal Loan Agreement (the "Agreement") is entered into as of ______________ by and between ______________, located at ______________ (the "Lender"), and ______________, located at ______________ (the "Borrower").
Lender agrees to loan to Borrower the principal sum of $0.00 (the "Loan"), which Borrower acknowledges receiving in full on or about ______________. The purpose of the Loan is: personal use.
The Loan shall bear interest on the outstanding principal balance at the rate of 5% per annum, computed on the basis of a 365-day year for the actual number of days elapsed. Interest shall begin accruing on the Loan Date and shall continue until the entire principal and all accrued interest are paid in full.
Repayment shall occur as mutually agreed by the parties in writing from time to time. In any event, the entire outstanding principal balance and all accrued interest shall be due and payable no later than ______________.
Borrower may prepay all or any portion of the outstanding principal balance at any time without penalty or premium. Any prepayment shall first be applied to accrued and unpaid interest, then to outstanding principal. Prepayment shall not affect the obligation to make regularly scheduled installment payments until the Loan is fully repaid.
If any payment due under this Agreement is not received within ten (10) days of its due date, Borrower shall pay a late charge equal to 5% of the overdue payment. This late charge is intended to compensate Lender for the cost of collection and delay, and is not a penalty. The imposition of a late charge shall not waive any default or limit any of Lender's other remedies.
The following shall each constitute an "Event of Default": (a) Borrower's failure to make any payment due under this Agreement within 15 days of its due date; (b) Borrower's filing of a voluntary petition in bankruptcy or entry of an order for relief in an involuntary bankruptcy case; (c) Borrower's making of a general assignment for the benefit of creditors; or (d) Borrower's insolvency or inability to pay debts as they become due.
Upon the occurrence of an Event of Default, Lender may, at Lender's option, by written notice to Borrower, declare the entire outstanding principal balance of the Loan, together with all accrued interest, late charges, and any other amounts due under this Agreement, to be immediately due and payable without further demand, protest, notice, or presentment. If Lender retains an attorney to enforce this Agreement, Borrower shall pay Lender's reasonable attorney's fees and court costs, to the extent permitted by applicable law.
This Agreement does not create a partnership, joint venture, trust, or any other legal relationship between Lender and Borrower other than that of lender and borrower. Borrower shall not represent to third parties that Lender has any ownership interest in any assets or enterprise of Borrower.
This Agreement constitutes the entire agreement between the parties with respect to the Loan and supersedes all prior discussions and understandings. This Agreement may not be modified except in a writing signed by both Lender and Borrower.
This Agreement shall be governed by and construed in accordance with the laws of the State of ______________, without regard to its conflict-of-laws principles.