A Loan Agreement is a document between a borrower and lender that details a loan repayment schedule.

Use LawDepot's Loan Agreement template for business transactions, student tuition, real estate purchases, down payments, or personal loans between friends and family.

Using a Loan Agreement protects you as a lender because it legally enforces the borrower's pledge to repay the loan in regular payments or lump sums. A borrower may also find a loan contract useful because it spells out the details of the loan for their records and helps keep track of payments.

Customize LawDepot’s Loan Agreement template to suit a variety of purposes, including:

• Business loans, such as capital for a startup business
• Purchases, such as a vehicle, boat, or furniture
• Real estate loans, such as a down payment on a home
• Student loans for tuition and other educational expenses
• Personal lending between friends or family for debts or bills

A Loan Agreement is more comprehensive than a Promissory Note and includes clauses about the entire agreement, additional expenses, and the process for amendments (i.e., how to change the terms of the agreement). Use a Loan Agreement for loans of a large amount or that come from multiple lenders. Use a Promissory Note for loans that come from non-traditional money lenders like individuals or companies instead of banks or credit unions.

Loan agreements generally include information about:

• The location. People usually choose the lender's location for the Loan Agreement, but if the agreement is for the purchase of assets, then the parties might choose to list the location of the assets instead.
• The lender and borrower. These details include name, address, and whether the lender or borrower is an individual or a corporation. You may also add a co-signer who agrees to pay the debt if the borrower defaults on the loan.
• The loan amount. The amount of money being lent to the borrower is the loan amount.
• Interest and late fees. If the lender charges interest, they may specify the percentage of interest and how often it’s compounded (monthly, every six months, or yearly). The lender may also penalize overdue payments by charging late fees or increasing the interest rate.
• Repayment method. The borrower may repay the loan in a single payment or regular payments. The agreement should outline the repayment schedule, when the final amount is due, and if the borrower can repay the loan early or in lump sums.
• Collateral and insurance. The borrower may secure the loan with collateral such as a vehicle, equipment, or jewelry. In this case, the lender may seize the collateral if the borrower cannot repay the full loan amount. The lender may also require the borrower to obtain insurance if using the loan to buy a vehicle.

Interest is a way for the lender to charge money on the loan and compensate for the risk involved with the transaction.

You may choose to begin charging interest or increase the interest rate if the borrower fails to make a payment on time. The increased interest provides you with additional compensation for the borrower's failure to pay as promised and the trouble of having to enforce the Loan Agreement.

If the borrower dies before paying off the loan, authorities will use their assets to pay the remainder of the debt. If there is a co-signer, the responsibility for the debt falls to them.

If the lender dies before receiving the complete repayment, the borrower owes to the lender’s estate. In this case, the beneficiaries of the lender’s estate will collect the remainder of the debt.

If the loan is for a significant amount, it’s important that you update your Last Will to specify how you want to deal with the outstanding loan upon your death.