Loan Agreement

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Loan Agreement

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LOAN AGREEMENT

THIS LOAN AGREEMENT (this "Agreement")  dated this ________ day of ________________, ________

BETWEEN:


____________________ of ______________________________________
(the "Lender")

OF THE FIRST PART

AND


____________________ of ______________________________________
(the "Borrower")

OF THE SECOND PART

IN CONSIDERATION OF the Lender loaning certain monies (the "Loan") to the Borrower, and the Borrower repaying the Loan to the Lender, the parties agree to keep, perform and fulfil the promises and conditions set out in this Agreement:

  1. Loan Amount & Interest
  2. The Lender promises to loan ₹____________________ to the Borrower and the Borrower promises to repay this principal amount to the Lender, without interest payable on the unpaid principal, beginning on 24 October 2026.
  3. Payment
  4. This Loan will be repaid in consecutive monthly instalments commencing on 24 October 2026 and continuing on the twenty-fourth of each following month until 24 October 2026 with the balance then owing under this Agreement being paid at that time.
  5. At any time while not in default under this Agreement, the Borrower may make lump sum payments or pay the outstanding balance then owing under this Agreement to the Lender without further bonus or penalty.
  6. Default
  7. Notwithstanding anything to the contrary in this Agreement, if the Borrower defaults in the performance of any obligation under this Agreement, then the Lender may declare the principal amount owing under this Agreement at that time to be immediately due and payable.
  8. Governing Law
  9. This Agreement will be construed in accordance with and governed by the laws of the Union Territory of the Andaman and Nicobar Islands.
  10. Costs
  11. The Borrower shall be liable for all costs, expenses and expenditures incurred including, without limitation, the complete legal costs of the Lender incurred by enforcing this Agreement as a result of any default by the Borrower and such costs will be added to the principal then outstanding and shall be due and payable by the Borrower to the Lender immediately upon demand of the Lender.
  12. Binding Effect
  13. This Agreement will pass to the benefit of and be binding upon the respective heirs, executors, administrators, successors and permitted assigns of the Borrower and Lender. The Borrower waives presentment for payment, notice of non-payment, protest, and notice of protest.
  14. Amendments
  15. This Agreement may only be amended or modified by a written instrument executed by both the Borrower and the Lender.
  16. Severability
  17. The clauses and paragraphs contained in this Agreement are intended to be read and construed independently of each other. If any term, covenant, condition or provision of this Agreement is held by a court of competent jurisdiction to be invalid, void or unenforceable, it is the parties' intent that such provision be reduced in scope by the court only to the extent deemed necessary by that court to render the provision reasonable and enforceable and the remainder of the provisions of this Agreement will in no way be affected, impaired or invalidated as a result.
  18. General Provisions
  19. Headings are inserted for the convenience of the parties only and are not to be considered when interpreting this Agreement. Words in the singular mean and include the plural and vice versa. Words in the masculine mean and include the feminine and vice versa.
  20. Entire Agreement
  21. This Agreement constitutes the entire agreement between the parties and there are no further items or provisions, either oral or otherwise.

IN WITNESS WHEREOF, the parties have duly affixed their signatures on this ________ day of ________________, ________.

SIGNED, SEALED, AND DELIVERED
this ________ day of ________________, ________.


 


_____________________________
____________________


SIGNED, SEALED, AND DELIVERED
this ________ day of ________________, ________.


 


_____________________________
____________________

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Loan Agreement Document Preview
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Last Updated 22 October 2026

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What is a Loan Agreement?

A Loan Agreement is a written contract between a lender and a borrower that records the terms of a loan. In India, it is often used for private loans between individuals, including friends and family members.

A written agreement helps the parties document their arrangement rather than relying only on a verbal understanding.

A Loan Agreement may also be called a:

  • Loan contract

  • Money lending agreement

  • Agreement for money lending

  • Money borrowing agreement

With LawDepot, you can create a customised Loan Agreement template online by answering guided questions about your private loan arrangement.

What is the purpose of a Loan Agreement?

A Loan Agreement helps a lender and borrower set clear expectations about a loan and keep a written record of the terms they agree to.

It may help the parties:

  • Clarify their responsibilities

  • Reduce misunderstandings about repayment

  • Record whether interest applies

  • Set out what happens if a payment is late or missed

  • Keep a record to refer to during the loan term

It can be useful for:

  • Personal loans between friends or family members

  • Loans between individuals

  • Loans from an individual to a business

  • Secured or unsecured private loans

The appropriate terms depend on the arrangement. A clear written agreement can help both parties understand what they have agreed to.

Secured vs. unsecured private loans

The key difference is collateral: an asset the borrower pledges to secure the loan.

Secured loans are backed by collateral, such as a car, jewellery, or savings account. They typically offer:

  • Lower interest rates
  • Higher borrowing limits
  • More security for the lender

The trade-off is that the borrower assumes more risk. If they do not repay the loan, the lender may be able to sell the pledged asset to recover the debt.

Unsecured loans are not backed by collateral. Because they present more risk to the lender, they may involve:

  • Higher interest rates
  • Lower borrowing limits
  • Additional restrictions or eligibility requirements

If the borrower defaults, the lender cannot automatically take a specific asset. They would generally need to pursue legal action to recover the money.

Is a Loan Agreement legally binding in India?

A Loan Agreement may be legally enforceable in India if it meets the general requirements for a valid contract. These generally include parties capable of entering a contract, free consent, lawful consideration, and a lawful object.

Whether an agreement is enforceable can also depend on its terms, the circumstances in which it was made, how it was executed, and applicable stamp duty requirements.

Does a Loan Agreement need to be notarised or witnessed?

Usually, no. A Loan Agreement does not generally need to be notarised or witnessed to be valid, but requirements may differ depending on the state or union territory and the type of loan. Ensure that it is properly stamped under the stamp laws of the relevant state or union territory, if required.

Notarisation or witness signatures can help prove that the parties signed the agreement. You may also need to meet additional requirements if the loan is secured by property or involves a bank, NBFC, housing finance company, or other lender.

Check the applicable laws and any lender or registration requirements before signing.

Is stamp duty required for a Loan Agreement?

Yes, stamp duty may be required for a Loan Agreement in India. The amount payable and the applicable rules vary by state or union territory, the type of loan, and whether the loan is secured.

For example, in Maharashtra, stamp duty may vary depending on whether the loan is secured by a mortgage, pledge, hypothecation, or the deposit of title deeds.

Check your state or union territory’s stamp duty rules before signing the agreement.

Which laws may apply to Loan Agreements in India?

Several laws may be relevant to a Loan Agreement, depending on the loan terms and where the agreement is made or executed. 

Examples of laws that may apply to your agreement include: 

  • Indian Contract Act, 1872: Sets out general rules for forming and enforcing contracts. 

  • Indian Stamp Act, 1899: A central source for stamp duty rules. State or union territory laws and amendments may also affect the requirements that apply to a Loan Agreement. 

  • State-specific money-lending laws: May apply when a person or business lends money as part of a business or profession. These laws may include licensing or other obligations. Private loans between individuals may be treated differently from professional money lending. 

Whether a law applies depends on the relevant legislation and circumstances.

What should a Loan Agreement include?

A complete Loan Agreement should clearly identify the parties and accurately record the terms to which they have agreed. Key components include:

Lender and borrower details

This section identifies the individuals or legal entities involved in the loan.

Loan amount and disbursement details

These terms confirm the amount borrowed, the currency, and the circumstances in which the funds are provided.

Interest rate and repayment terms

These provisions establish whether interest is payable and when and how the loan must be repaid.

Security or collateral, if applicable

Security terms identify the asset securing the loan and the lender’s rights over it if the borrower defaults.

Default does not automatically transfer ownership of collateral to the lender. The outcome depends on the agreement and applicable law.

Default, late payment, and prepayment terms

These terms address missed or late payments, as well as early repayment of the loan.

Governing law, signatures, and witnesses

These provisions identify the state or union territory whose laws will be used to interpret and enforce the agreement, and provide evidence that the parties accept its terms. Witnesses may be relevant in some cases.

How do I create a Loan Agreement with LawDepot?

Creating a Loan Agreement online with LawDepot’s template can help organise the terms of a private loan in minutes. 

Complete our user-friendly questionnaire

Enter the lender’s and borrower’s details, along with the key terms the parties have agreed to. 

Our questionnaire prompts you to answer a few clarifying questions about the nature of the loan and how repayments will be handled. 

These questions may include details such as the purpose of the loan, the amount, any interest on the loan, the date the loan will be lent, and the frequency of repayments

Review the completed agreement

Review the completed Loan Agreement carefully to make sure it accurately reflects the arrangement before the parties sign it. If the parties disagree about any terms, they can discuss and revise the draft before signing.

If disputes arise under the agreement after it is signed, there are a few ways to resolve them. In India, you can consult the Lok Adalat (People’s Court) for amicable dispute settling, particularly for money matters.

Alternatively, options like arbitration under the Arbitration and Conciliation Act, 1996 may also be available. 

Consider signing requirements

Check whether stamp duty, witnesses, notarisation or other execution requirements apply to the transaction.

Keep signed copies

After signing, the lender and borrower should each keep a complete copy of the Loan Agreement. They should also retain records showing when funds were provided and when repayments were made.

Loan Agreement FAQs

What is the difference between a Loan Agreement and a Promissory Note?

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A Promissory Note is a more simplified document containing a borrower’s promise to repay money. Its terms are less complex, and it's commonly used for lower-valued loans between well-acquainted parties.

A Loan Agreement is a more comprehensive contract, better suited for larger sums of money. It can record additional terms, such as security arrangements, the parties’ responsibilities, dispute resolution, and other loan-specific provisions.

What happens if the borrower or lender dies before the loan is repaid?

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If a borrower or lender dies before the loan is repaid, the loan is generally handled by their estate under the terms of the Loan Agreement and any applicable succession laws.

The borrower’s estate may remain responsible for repayment, while the lender’s right to receive payment may pass to the estate or legal representatives. The outcome depends on the agreement, applicable succession laws, and the specific circumstances.

What should I do if the borrower does not repay the loan?

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If a borrower fails to repay a loan, review the signed Loan Agreement and contact the borrower about the missed payment. Keep records of missed payments and any communications with the borrower.

If payment is still not made, a lender may consider sending a formal Demand Letter. For significant, disputed, or complex loans, legal advice may be appropriate. 

Can I cancel a Loan Agreement before the funds are disbursed?

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A Loan Agreement can be cancelled if the agreement allows cancellation, or both parties agree not to proceed. Once signed, however, the agreement may create binding obligations even before the lender provides the funds.

Whether either party can cancel depends on the agreement’s terms and applicable law. 

Should I keep copies of the signed Loan Agreement?

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Yes. The lender and borrower should each keep a complete signed copy, along with records showing when funds were provided and when payments were made.

Clear records can help both parties refer to the agreement if questions arise later.

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Related Documents:

  • Demand Letter
    Request payment from a party in default.
  • Bill of Sale
    Document the transfer of ownership of an item from a seller to a buyer.
  • Promissory Note
    Simpler than a Loan Agreement, a Promissory Note is an enforceable promise for a borrower to pay back a loan to a lender.
Loan Agreement

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