Can I lend money to family without a written agreement?

While you can lend money informally, a written U.S. personal loan agreement is strongly recommended. It prevents misunderstandings about repayment, provides American tax documentation, and protects you legally if the borrower does not repay. A written agreement clarifies expectations and helps preserve the relationship.

How does the IRS treat personal loans?

The U.S. IRS requires personal loans to have an interest rate that meets or exceeds the applicable federal rate. American loans without proper interest may be treated as gifts, triggering gift tax implications. A written personal loan agreement with appropriate interest helps establish that the transaction is a loan, not a gift.

What is an unsecured versus secured personal loan?

An unsecured personal loan has no collateral and relies on the borrower's promise to repay. A secured personal loan includes collateral (property, equipment, etc.) that the lender can claim if the borrower defaults. Secured loans are less risky for lenders but may damage relationships.

What interest rate should I charge on a personal loan?

The interest rate depends on your U.S. state's usury limits, the loan amount, the borrower's credit, and current market rates. For family loans, the U.S. IRS applies minimum interest rates. Research your state's usury laws and consider consulting an American tax professional to determine an appropriate rate for your situation.

Do I need to report the loan to the IRS?

If you charge interest, you typically must report the interest income on your U.S. tax return. If you forgive the loan, it may trigger American gift tax implications depending on the amount. Consult a U.S. tax professional about your specific situation, especially for family loans and loan forgiveness.

What happens if the borrower cannot repay the loan?

If the borrower cannot repay according to the agreement, the written agreement specifies your options. These may include demanding immediate full payment, obtaining a judgment through court, or pursuing other legal remedies. The written agreement strengthens your legal position in any dispute.

Can I charge late fees on a personal loan?

Yes, you can include late fees or interest charges for overdue payments in your U.S. personal loan agreement. Ensure your late fees comply with applicable American state laws and are reasonable. Clearly state any late fees in the agreement upfront so the borrower knows the consequences of late payment.

Should the personal loan agreement be notarized?

While notarization is not legally required, it is recommended. Notarization verifies the identities of the signers and strengthens the legal validity of the document. Notarized personal loan agreements are stronger evidence if you need to enforce the loan in court or resolve disputes.

Personal & FamilyUnited States

Free Personal Loan Agreement Template

Formalize a loan between friends or family members with a personal loan agreement. Includes interest rates, repayment schedules, and default terms with our US template.

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PERSONAL LOAN AGREEMENT

Promissory Loan Agreement Between Private Parties

LENDER

Robert Johnson

48 Elm Street, Austin, TX 78701

By: (512) 555-0142 | rjohnson@email.com

BORROWER

Maria Santos

12 Maple Avenue, Austin, TX 78702

By: (512) 555-0198 | msantos@email.com

Loan Amount: 8,000.00 USD

Loan Date: March 15, 2026 | Due Date: March 15, 2027 | APR: 5%

This Personal Loan Agreement ("Agreement") is entered into as of March 15, 2026 by and between Robert Johnson ("Lender") and Maria Santos ("Borrower"), collectively referred to as the "Parties." The Lender agrees to provide a personal loan to the Borrower under the terms and conditions set forth in this Agreement, and the Borrower agrees to repay the Loan Amount in accordance with the repayment schedule herein.

LOAN AMOUNT AND DISBURSEMENT

Lender agrees to loan Maria Santos the principal sum of 8,000.00 USD ("Loan Amount"). The Borrower acknowledges receipt of the Loan Amount in full as of the Loan Date specified above. The Loan Amount shall be disbursed by check, wire transfer, or other method mutually agreed upon by the Parties.

INTEREST

The outstanding principal balance of this Loan shall accrue interest at an annual rate of 5% per annum, calculated on a simple interest basis. Interest shall begin accruing from the Loan Date and shall continue until the entire principal balance and all accrued interest have been repaid in full. No compound interest shall apply unless otherwise agreed in writing. Usury Limitation. Notwithstanding any other provision of this Agreement, in no event shall the interest rate charged or collected hereunder exceed the maximum lawful rate permitted under the civil and criminal usury statutes of the governing state (including, as applicable, N.Y. Penal Law §190.40 (25% criminal usury ceiling), Cal. Const. Art. XV §1 (10% for non-secured-by-real-property personal loans), Tex. Fin. Code ch. 303, and Fla. Stat. §687.03 (18% simple)); any excess interest shall be refunded or credited to principal. If the Borrower is a "covered borrower" within the meaning of the Military Lending Act, 10 U.S.C. §987 and 32 C.F.R. Part 232, the Military Annual Percentage Rate (MAPR) shall not exceed 36% and all protections of the MLA shall apply, including mandatory disclosures and prohibitions on mandatory arbitration. For below-market intra-family or gift-loan transactions, the Parties acknowledge the imputed-interest and original-issue-discount rules of IRC §§1274 and 7872, and agree to report the Loan consistently with the applicable federal rate (AFR) then in effect.

REPAYMENT SCHEDULE

The Borrower shall make monthly payments of 700.00 USD, due on the same calendar day each month, commencing one month after the Loan Date and continuing until March 15, 2027, at which point any remaining balance (including accrued interest, if applicable) shall be due and payable in full.

PREPAYMENT

The Borrower may prepay the Loan in whole or in part at any time without penalty or premium. Any partial prepayment shall be applied first to any accrued interest and then to the outstanding principal balance. Prepayment shall not alter the scheduled due dates for any remaining installments unless otherwise agreed in writing.

LATE PAYMENT AND DEFAULT

Any payment not received within a 5-day grace period following its due date shall incur a late fee of 35.00 USD per occurrence. If the Borrower fails to make 2 or more consecutive required payment(s), the Lender may, at their sole discretion, declare the entire outstanding balance (including principal, accrued interest, and all fees) immediately due and payable ("Acceleration"). The Lender shall provide written notice to the Borrower at least ten (10) days prior to exercising the right of Acceleration.

COLLATERAL AND SECURITY INTEREST

To secure repayment of the Loan, the Borrower hereby grants the Lender a security interest in the following property: 2020 Toyota Camry, VIN 4T1BF1FK5CU031714, registered to Maria Santos. The Lender may file a UCC-1 Financing Statement or equivalent document to perfect this security interest. Upon an Event of Default, the Lender may exercise all rights and remedies of a secured party under the applicable Uniform Commercial Code, including, but not limited to, taking possession of and selling the collateral to satisfy the outstanding debt.

DISPUTE RESOLUTION

In the event of any dispute, claim, or controversy arising out of or relating to this Agreement, the Parties agree to first attempt resolution through good-faith mediation conducted in Texas before initiating any legal proceedings. Each Party shall bear its own costs of mediation unless otherwise agreed. If mediation fails to resolve the dispute within thirty (30) days, either Party may pursue remedies available at law or in equity.

ADDITIONAL TERMS

Borrower agrees to notify Lender promptly of any change in employment or address.

FEDERAL CONSUMER-CREDIT COMPLIANCE

To the extent this Loan constitutes a consumer credit transaction (that is, credit extended primarily for personal, family, or household purposes), the Parties acknowledge and agree that the following federal statutes may apply and shall control over any inconsistent provision of this Agreement: (a) the Truth in Lending Act, 15 U.S.C. §§1601-1666j, and its implementing Regulation Z, 12 C.F.R. Part 1026, requiring disclosure of the annual percentage rate, finance charge, amount financed, and total of payments; (b) the Fair Debt Collection Practices Act, 15 U.S.C. §§1692-1692p, governing the conduct of any third-party debt collector retained to collect on this obligation; (c) the Equal Credit Opportunity Act, 15 U.S.C. §1691 et seq., and Regulation B, 12 C.F.R. Part 1002, prohibiting discrimination on the basis of race, color, religion, national origin, sex, marital status, age, or receipt of public assistance; (d) the supervisory authority of the Consumer Financial Protection Bureau under 12 U.S.C. §5491 et seq.; and (e) the Military Lending Act, 10 U.S.C. §987, where the Borrower is a covered servicemember or dependent. Lender disclaims any intent to evade these protections, and any provision of this Agreement that would otherwise violate applicable federal consumer-protection law shall be construed, modified, or severed to the extent necessary to ensure compliance.

10.

GOVERNING LAW, SEVERABILITY, AND ENTIRE AGREEMENT

This Agreement shall be governed by and construed in accordance with the laws of the State of Texas, without regard to its conflict of law provisions. If any provision of this Agreement is found to be invalid, illegal, or unenforceable, the remaining provisions shall continue in full force and effect. This Agreement constitutes the entire agreement between the Parties with respect to the subject matter hereof and supersedes all prior negotiations, representations, and agreements. No modification or amendment shall be effective unless made in writing and signed by both Parties. All notices required under this Agreement shall be in writing and delivered to the addresses listed above.

IN WITNESS WHEREOF, the Parties have executed this Personal Loan Agreement as of the date first written above. Each Party represents that they have read and understood this Agreement in its entirety, have had the opportunity to seek independent legal counsel, and agree to be bound by its terms and conditions.

LENDER

Robert Johnson

Lender

Date: ____________________

BORROWER

Maria Santos

Borrower

Date: ____________________

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What Is a Personal Loan Agreement?

A personal loan agreement is a written contract used throughout the United States between a lender and borrower documenting a loan of money between individuals. This U.S. agreement specifies the loan amount, interest rate, repayment schedule, and terms. Personal loan agreements are commonly used for loans between American friends, family members, and individuals in business relationships.

A personal loan agreement creates a U.S. legal record of the transaction and protects both American parties by clearly outlining the terms and obligations. Unlike informal lending, a written agreement prevents misunderstandings, provides documentation for U.S. tax purposes, and gives the lender legal recourse if the borrower fails to repay according to the agreed terms.

Even though lending money to someone you know well can feel informal, creating a written U.S. personal loan agreement is essential. It demonstrates respect for the relationship by making expectations clear and ensures both American parties understand their obligations. A written agreement also provides protection if personal circumstances change or disputes arise.

What's Covered in This Template

Doxuno's personal loan agreement template includes all essential clauses and sections needed to formalize a loan between individuals. Each section can be customized to match your specific lending arrangement and relationship.

Lender and Borrower Info

Loan Amount

Interest Rate and Calculation

Repayment Schedule

Late Payment Penalties

Prepayment Rights

Default Definition

Collateral Terms

Governing State Law

Entire Agreement

Waiver Provisions

Signatures and Dates

How to Create Your Personal Loan Agreement

Creating a personal loan agreement protects both the lender and borrower. Our template makes it simple to formalize your loan with clear terms. Follow these steps to create a comprehensive personal loan agreement.

1
Identify Both Parties
Provide the full legal names and current contact information for both the lender and borrower. Include any relevant addresses. Be clear about who is lending money and who is borrowing to eliminate any ambiguity.
2
State the Loan Amount
Document the exact principal amount being loaned in both numeric form and written words. Include the date the money is being transferred to the borrower. Be precise to prevent any misunderstandings about how much money is being lent.
3
Define Interest and Payment Terms
Specify whether the loan includes interest and at what annual percentage rate. Define the repayment frequency (monthly, quarterly, etc.), payment amount, and specific due dates. Check your state's usury laws to ensure your interest rate complies.
4
Include Default and Collateral Terms
Define what constitutes default, such as missing a payment. Specify if any collateral secures the loan or if it is unsecured. Include the consequences if the borrower cannot pay as agreed and how you will handle default situations.
5
Sign and Keep Records
Have both the lender and borrower sign and date the agreement. Consider having the signatures notarized for additional legal protection. Each party should keep an original signed copy. Store the document safely with your other financial records.

Why Doxuno documents are different

Four things that make our templates more thorough than AI-generated drafts and more current than static template libraries.

Accurate

Country-specific legal content

Drafted with legal expertise for each jurisdiction, far more thorough than AI-generated drafts that copy generic clauses across borders.

Always current

Always current with the law

Templates carrying statute references are continuously updated as the law changes. Your document always reflects the current legal framework.

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Continue editing in Word after download. Add custom clauses, reuse the template for similar agreements, or share with a colleague for collaborative review.

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Legal Considerations for US Personal Loan Agreements

Personal loan agreements between individuals are subject to specific legal and tax rules. Understanding how the IRS treats personal loans and how state laws apply helps ensure your agreement is legally sound and protects your financial interests.

This template is provided for informational purposes and does not constitute legal advice. For tax implications or complex lending situations, consult a licensed tax professional or attorney in your jurisdiction.

Reviewed by legal professionals. The content on this page and the template clauses have been reviewed by licensed professionals experienced in personal lending and family loan agreements to ensure legal accuracy.

Gift versus Loan Distinction and IRS Rules

The U.S. IRS distinguishes between gifts and loans. A loan requires a written agreement, repayment terms, and an interest rate that meets or exceeds the applicable federal rate. American loans without proper interest may be treated as gifts, which can trigger U.S. gift tax implications for the lender. Creating a written personal loan agreement with appropriate interest helps establish that the transaction is a loan, not a gift.

Usury Laws and Interest Rate Limits

Each U.S. state has laws limiting how much interest can be charged on loans, called usury limits. These limits vary significantly by American state. Some states have no limit on personal loans, while others cap interest rates. Before setting an interest rate, research your state's usury laws to ensure you comply with U.S. law. An interest rate that exceeds your state's limit may make the agreement unenforceable.

Secured versus Unsecured Personal Loans

A U.S. secured personal loan includes collateral that the American lender can claim if the borrower defaults. An unsecured loan has no collateral and relies on the borrower's promise to repay. While secured loans are safer for lenders, they can strain personal relationships if the lender must seize collateral. Decide whether your U.S. personal loan will be secured or unsecured based on the situation and the amount involved.

Frequently Asked Questions

Protect Your Loan with a Written Agreement

Create a personal loan agreement in minutes. A written agreement protects both you and the borrower by establishing clear expectations and legal terms.

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