Personal Loan Agreement

What this document is

A personal loan agreement is a written contract between two people: one who lends money and one who promises to pay it back. It records the amount, the date the money changed hands, any interest, and exactly how and when repayment happens. Banks put every loan in writing for a reason — memories fade and circumstances change. When you lend ฿50,000 to a coworker or $2,000 to an old classmate, a signed document protects both of you in the same way.

The agreement works because it removes guesswork. Without one, the lender remembers a firm promise to repay by December, while the borrower remembers a casual arrangement with no real deadline. Both may be perfectly honest — they simply recall the conversation differently. A one-page written agreement settles those questions in advance, so any repayment discussion is about the schedule you both signed, not about whose memory is right.

This template covers the full life of a loan: the handover of funds, the repayment plan, what counts as a late payment, and what the lender can do if the borrower stops paying. It is written in plain language for everyday lending between individuals — no legal training needed. In many countries a signed written record also matters if you ever need to prove the loan existed, though how courts treat it varies by jurisdiction.

When to use it

• You are lending a meaningful amount — say ฿20,000 or more — to someone outside your immediate family.
• The borrower will repay over time rather than in one quick payment.
• You want to charge interest and need the rate written down clearly.
• You are the borrower and want proof of the exact terms, so the lender cannot change them later.
• Money is about to change hands and you both want the terms fixed before it does.
• A colleague or acquaintance asked for a loan and you want to keep the relationship clean by putting everything on paper.

When not to use it

• The loan is secured by land, a house, or another registered asset — mortgages and registered security usually need country-specific documents and professional help.
• You lend money regularly or for profit — many countries require a moneylending license for that.
• The amount is very large relative to your finances, or the borrower is already in serious debt — talk to a lawyer before signing anything.
• You are consolidating or refinancing formal bank debt — that needs the bank's own paperwork.

Information you will need

• Full legal names, addresses, and ID or passport numbers of the lender and borrower
• Loan amount in figures and words, plus the currency
• Date and method of handing over the money (bank transfer, PromptPay, cash)
• Interest rate, if any, and how it is calculated (flat or on the outstanding balance)
• Repayment schedule: installment amounts and due dates, or a single repayment date
• Accepted payment methods and the account repayments should go to
• Late payment consequences you both agree on
• Names of witnesses, if you plan to have any sign

Clauses included

How to sign it

Both the lender and borrower should sign and date the agreement, ideally before the money is transferred. Each person keeps a copy — a photo or scanned PDF on your phone is fine as a backup, but keep the paper original somewhere safe too.

Witnesses are not always required, but they help. One or two adults who are not related to either party can sign to confirm they saw the agreement being made. In some countries a witnessed document carries more weight in a dispute; local practice varies, so check what is common where you live.

Transfer the money in a way that leaves a record — a bank transfer or PromptPay payment with a reference note like 'Loan per agreement dated 15 July 2026' connects the money directly to the document. If you must hand over cash, sign a receipt at the same time.

Common mistakes

• Handing over the money before the agreement is signed — the moment the cash moves, your leverage to get a signature drops sharply.
• Writing 'to be discussed' for the repayment date. An agreement without a firm final due date leaves the single most disputed point wide open.
• Recording the amount only in figures. ฿50,000 and ฿500,000 differ by one zero — write the amount in words as well.
• Agreeing an interest rate above your country's legal cap for private loans. Excess interest is commonly unenforceable and can create legal trouble for the lender.
• Accepting repayments in untraceable cash without issuing a receipt for each one.
• Not updating the agreement when you renegotiate. If you extend the deadline verbally, the paper no longer matches reality — use a written amendment or extension.
• Leaving out what happens on default, so you are back to negotiating from zero the day payments stop.

Frequently asked questions