A personal loan agreement between an employer and an employee refers to the terms and conditions set and signed by the two parties in which an employee takes a fixed amount as a personal loan from the employer. The acknowledgement of the employee for the loan is signed proof that he or she owes the money and has allowed the employer to deduct payments from his or her salary on a set time interval.
As an employer can control repayments of a staff loan, it becomes important for the employer to have written authorization for the deduction of money from his employee’s salary. Signing an agreement helps both the employer and the employee to avoid any legal complications and legitimizes the process of lending and borrowing.
Sample Personal Loan Agreement 1
Company Name and Address: Nishan Micra, SCO 106, Street- 4, State- California
Employee Name: Mr. Jackson Hewitt
1. Hereby, a debt is acknowledged by the employee to the employer/company in the amount of $1000 for the following reason(s):
a. He needs it to pay off his car loan for which 2 years are left.
b. He wants to pay off the loan immediately as it will improve his scope of applying for home loan.
2. The Employee readily agrees and acknowledges that loan amount at an interest rate of 12.5% per annum. It will be accrued on any pending amount and the repayment amount will be first applied to interest and then to the principal amount.
3. The employee has authorized the employer/company to deduct the amount of $1000 ($100) per paycheck from the payroll of the employee starting from 19th November 2015 till the amount is paid in full.
4. The employee has also agreed that the pending amount will be deducted through employee’s paycheck in case he resigns or gets terminated from employment with the employer/company.
Employee’s Signature: _______________________
Witness 1 Signature: _______________________
Witness 2 Signature: ________________________
Sample Personal Loan Agreement 2
This employer and employee loan agreement will be considered effective from 19th November, 2015.
Mr. John Hatchinson, CEO of Hatchinson Textiles, (the employer), a company functioning and existing under the laws of the state of California with its head office located at Street No-54, City- Seal, State- California, Zip code- 5649032
Mr. Jacob Stevenson (the employee), a person with his main address at Street No- 4, City- Cyska, State- California, Zip code- 5649032
Employee has requested loan from the employer for personal reasons.
In consideration of the mutual promises and covenants contained herein, the employer and the employee agree on the following terms:
Terms and Conditions
Loan and Payment
On the date first written above, company shall give loan of a sum of $1000 to the employee at an annual interest rate of 12.5% and payable by withholding of $100 per bi-weekly pay period commencing on November 23rd, 2015 and continuing till April 23rd, 2015.
Sign by Employer __________
Sign by Employee __________