Below is a sample of a very simple loan agreement template that can be used between two individuals, whether they are acquaintances, coworkers, friends or family members. Creating an agreement letter that clearly states the exact amount being borrowed, the exact date of the transaction as well as when it is due, and the names and signatures of the two parties is crucial in order to avoid any headaches down the road.
Moreover, the lender and borrower can also agree on an interest rate, collateral (in the event that the borrower fails to pay back the loan), and a co-signer. When deciding on an interest rate, it is best to check your state usury laws because there are caps to how high it can go. Typically, interest rates can range anywhere from 1% to 10%. Collateral can be anything that the lender deems valuable (car, house, jewelry, stocks, etc.). Lastly, a co-signer is someone who is willing to pay the loan in the event that the borrower cannot or does not.
Simple Loan Agreement Template
Date: October 31st, 2013
This is to certify that I, Jax Teller, am entering into an agreement with Clay Morrow today on October 31st, 2013. This loan amount is for $300 that I have received today in cash. I have also put up a limited edition Star Wars replica Darth Vader helmet as collateral against the loan. The loan agreement terms are as follows:
1. The loan is to be paid in full at once, partial payments will not be accepted.
2. The loan is to be paid in full within 30 days of today’s date.
3. There is an interest rate of 5% on the loan.
4. The total amount is due by November 30th is $360.
If the loan amount is not paid in full by November 30th then there will be an additional charge of $2 a day added on to the $360.
If the loan amount is still not paid in full by December 31st, then the Limited Edition replica Star Wars Darth Vader helmet will be forfeited and can be sold to recoup the cost of the loan.
I, Jax Teller, hereby promise to pay back the loan amount in full as stated above. I also agree to the terms and conditions of this loan as defined above. I also state that the Limited Edition Star Wars Replica helmet is mine and that I fully own it. I also have my mother, Gemma Teller, as a co-signer for this loan. She has agreed to help me if need be to pay off this loan in order for me to receive the helmet back.
Borrower’s Signature, Date
Co-Signer’s Signature, Date
Loaner’s Signature, Date