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Loan Agreement Template

A basic know-how about drafting a loan agreement would prove beneficial for both lenders as well as borrowers. Here is a loan agreement template for your reference.
Medha Godbole
Loans have become very commonplace now. For almost anything and everything you can avail a loan. Be it a house, a car, or even repaying a loan as well! To make the transactions easier and hassle-free, banks and financial institutions use specific templates. A loan agreement refers to the document in which the terms, conditions, and details related to the loan are laid down. As we all know, there are numerous types of loans, with varying terms and conditions. The clauses may also vary with individual circumstances as well as requirements. However, there are certain elements that can be commonly found in most of the loan agreements.

A loan agreement typically includes details of the borrower, lender, amount of loan, period of loan, interest rate, monthly repayment, late payment, prepayment and cancellation, default in payment, etc. Additional provisions are included as per the type of the loan, and the specific circumstances. It is really difficult to come up with a template that can be used for all types of loans. As mentioned above, the terms and conditions may not be the same for all. This loan agreement template is a basic format that includes some of those elements that are common for most of the loan types.

Disclaimer: This template is for reference purposes only. It is always advisable to consult an expert, if you want to draft a loan agreement.


1.Between: __________________ (The name and address of the LENDER)

And: __________________ (The name and address of the BORROWER)

2. Date of Agreement: __________________.

3. Promise to Pay: Within _____ months from today, Borrower promises to pay to Lender______________ dollars ($_______) and interest and other charges as stated below.

4. Responsibility: Although this agreement may be signed below by more than one person, each of the signatories understand that they are individually, jointly, and severally liable for paying back the full amount.

5. Breakdown of Loan: Borrower will pay:
Amount of Loan: $__________
Other (Describe): $__________
Amount financed: $__________

Finance charge: $__________
Total of payments: $__________


6. Repayment: Borrower will repay in the following manner: Borrower will repay the amount of this note in _____ equal uninterrupted monthly installments of $____________ each on the _____ day of each month starting on the _____ day of _______, 20____, and ending on _________, 20____.

7. Prepayment: Borrower has the right to prepay the whole outstanding amount at any time. If Borrower pays early, or if this loan is refinanced or replaced by a new note, Lender will refund the unearned finance charge, figured by the Rule of 78, a commonly used formula for figuring rebates on installment loans.

8. Late Charge: Any installment not paid within ten (10) days of its due date shall be subject to a late charge of 5% of the payment, not to exceed $____________ for any such late installment.

9. Security: To protect Lender, Borrower gives what is known as a security interest or mortgage in: [Describe:] _____________________________________

10. Default: If, for any reason, Borrower fails to make any payment on time, Borrower shall be in default. The Lender can then demand immediate payment of the entire remaining unpaid balance of this loan, without giving anyone further notice. If Borrower has not paid the full amount of the loan when the final payment is due, the Lender will charge Borrower interest on the unpaid balance at ______ percent (%) per year.

11. Right of Offset: If this loan becomes past due, the Lender will have the right to pay this loan from any deposit or security Borrower has with this lender without notice to him/her.
If the Lender gives Borrower an extension of time to pay this loan, he/she still must repay the entire loan.

12. Collection fees: If this note is placed with an attorney for collection, then Borrower agrees to pay an attorney's fee of fifteen percent (15%) of the unpaid balance. This fee will be added to the unpaid balance of the loan.

13. Co-borrowers: Any Co-borrowers signing this agreement agree to be equally responsible with the borrower for this loan.

Agreed To:




If you are planning to borrow or lend a loan, it is always better to opt for a written loan agreement that clearly states the terms and conditions. It is also advisable to draft such an agreement with the help of an expert. You must use the correct template or draft an agreement as per your requirement. Consult your lawyer, before drafting a loan agreement or signing one.