Loan Agreements For Individuals

Lending to Friends and Family: Guide

"Private loans between family members and friends are a convenient, flexible and cheap alternative to using commercial loan organisations such as banks or pay-day lenders.

Many people in need of a loan will first approach relatives or friends who appear to have money to spare, especially if the borrower does not have a good credit history, or is just starting out financially.

The lender may have good reasons for making the loan which are not financial, for example parents may lend their children money for university or to help them buy their first home.

Whatever the motivations are for such private loans it is important to be aware of the potential ramifications of introducing financial matters into a personal relationship.

For example, the lender might appear to gain power over the borrower, or siblings who have not received similar loans could become jealous of those who have. Even worse, what if the borrower can't or won't pay back the loan?

To avoid such damaging implications (to relationships or finances) it's a good idea to first consider carefully whether to make the loan, and then formalise the terms of the loan and repayment arrangements in a written agreement."

Template: Unsecured Loan Agreement: person to person; private or business

What Net Lawman says about this template:

"This agreement can be used in any situation where the lender does not require or is willing to forgo security in case of default."

Template: Friends and Family Loan Agreement

What Net Lawman says about this template:

"This is a simple loan agreement suitable for lending to friends or family. Use this document when you need to record the loan, but where you have a high level of trust with the borrower." 

Template: Loan Agreement: private borrower; secured on physical assets

What Net Lawman says about this template:

"This agreement sets out the terms of a loan to a person (not a company), secured on specific physical assets such as a vehicle or equipment"

Template: Loan Agreement: person to person; secured by guarantee

What Net Lawman says about this template:

"This loan agreement for situations where both the lender and the borrower are individuals, and where the loan is secured by a guarantee by another person.

It is likely to be used for loans to friends and arms length business deals."

Template: Loan Agreement: individual borrower; secured on financial assets

What Net Lawman says about this template:

"This agreement records a loan to a borrower who is an individual. The loan is secured against financial, intangible assets, such as shares.

There is also an optional provision for a third party guarantee if required and options for alternative repayment provisions and lender actions if the borrower defaults."

Template: Loan Agreement: person to person; property purchase

What Net Lawman says about this template:

"Use this document to lend money to family or friends for the purpose of helping to buy a house or flat, or for a renovation project. The loan can optionally be secured on a guarantee by a third party."

Detailed guidance notes are provided with each template. Net Lawman offers a money back guarantee if the document is not what you need, as well as a legal review option if you want some professional assistance when you are drawing up your documents.


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