Personal Loan Contract
Jim Clark Co
Free Template
Personal Loan Agreement Template
Updated September 23, 2025
A personal loan agreement is a legal contract between a lender and borrower that outlines the loan amount, interest rate, repayment schedule, and consequences of default. It may also include whether the loan is secured by collateral, governing law, and both parties’ signatures to make it enforceable.
What is a Personal Loan Agreement?
Unlike a mortgage or car loan, personal loans are flexible and can be used for almost any purpose—from emergencies to home projects or consolidating debt. A written loan agreement keeps expectations clear and helps avoid misunderstandings.
A personal loan is a lump-sum amount repaid in fixed installments over a set term. A line of credit, however, is an ongoing access to funds up to a limit, with interest charged only on what’s borrowed—offering flexibility but with more risk of overspending.
Types of Personal Loans
- Secured loans: Require collateral, such as a home or car
- Unsecured loans: Based on credit history, no collateral required
- Fixed-rate loans: Interest rate stays the same for the entire term
- Variable-rate loans: Interest may rise or fall with market conditions
- Debt consolidation loans: Combine multiple debts into one with a potentially lower interest rate
Interest Rate Rundown
Rates typically range from 3% to 36%, depending on credit score, loan amount, and term length. A strong credit history and shorter repayment period often lead to lower rates, saving borrowers money in the long run.
Key Clauses to Include
A solid personal loan agreement should cover:
- Parties involved: Names, contact information and addresses
- Loan amount: The total borrowed and how it will be disbursed
- Repayment terms: Schedule, amounts, and total duration
- Interest rate: Fixed or variable, and how it’s calculated
- Collateral: If secured, details of the pledged asset
- Fees and penalties: For late payments, early repayment, or defaults
- Default terms: Lender’s rights if the borrower can’t pay
- Signatures: Sign and date to make the agreement valid
The Repayment Clause
This section is the backbone of the agreement, spelling out:
- Repayment amounts (principal + interest)
- Payment schedule (monthly, bi-weekly, etc.)
- Accepted payment methods
- Rules for early repayment, late payments, and defaults
By clearly documenting these terms, both parties know exactly what to expect and how the loan will be managed.
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Personal Loan Agreement
Jim Clark Co
AgreementThis Personal Loan Agreement ("Agreement") is made and entered into on (the “Effective Date”) by and between the Borrower, legal name ("Borrower") and the Lender, legal name/company ("Lender") (collectively, the “Parties”).
1. Loan Amount and Disbursement
The Lender agrees to loan the Borrower the principal sum of $ (the "Loan Amount"), which shall be disbursed under the following terms:
Lump sum disbursement on
Installment disbursements as follows:
- Amount: $ on
- Amount: $ on
The Borrower acknowledges receipt of the Loan Amount and agrees to repay such amount in accordance with the terms of this Agreement.
2. Interest Rate and Finance Charges
The Loan shall bear interest at a fixed annual rate of %, resulting in an Annual Percentage Rate (APR) of %. Interest shall accrue daily and compound monthly on the unpaid balance.
Unless otherwise prohibited by law, interest will continue to accrue on any unpaid balance following default or acceleration until paid in full.
3. Repayment Terms
The Borrower agrees to repay the Loan in accordance with the following schedule:
- Payment Frequency:
- Installment Amount: $
- First Payment Due:
- Final Payment Due:
All payments shall be applied first to any accrued interest, then to principal.
4. Method of Payment
Payments shall be made via:
Bank Transfer Check Cash
Automatic Withdrawal from the following account:
- Bank Name:
- Account Number:
- Routing Number:
- Borrower authorizes Lender to initiate automatic debits as necessary for payment collection. Any fees associated with returned or rejected payments shall be borne by the Borrower.
5. Prepayment
Borrower may:
Prepay this Loan in full or in part at any time without penalty.
Prepay this Loan subject to a prepayment penalty of $ or % of the remaining balance.
Any prepayment shall be first applied to accrued interest, then to the outstanding principal balance.
6. Security for the Loan (Collateral)
This is an unsecured loan.
This Loan is secured by the following collateral:
- Description:
- Location:
- Estimated Value: $
In the event of Borrower’s default, Lender shall have the right to take possession of and dispose of the collateral in a commercially reasonable manner, as permitted by law, to recover the balance due.
7. Late Fees and Default
If any scheduled payment is more than days late, the Borrower agrees to pay a late fee of $ or % of the overdue amount, whichever is greater. Failure to make two or more payments or any material breach of this Agreement shall constitute default.
In the event of default, the Lender may:
- Accelerate all remaining obligations and demand immediate payment in full
- Initiate legal proceedings
- Exercise any rights with respect to collateral (if applicable)
8. Modification of Terms
No provision of this Agreement may be amended, modified, or waived except in writing signed by both parties. Oral modifications shall be invalid and unenforceable.
9. Termination
This Agreement shall terminate upon the full repayment of the Loan and any accrued interest, or earlier as mutually agreed in writing by the parties.
Lender may terminate this Agreement upon Borrower’s default by written notice, and all unpaid obligations shall become immediately due and payable.
10. Entire Agreement
This document represents the entire agreement between the parties. It supersedes all prior discussions, negotiations, or representations. No other promises, conditions, or understandings shall be binding unless stated herein.
11. Severability
If any provision of this Agreement is deemed unlawful or unenforceable, such provision shall be severed, and the remaining provisions shall remain in full force and effect.
12. Governing Law and Dispute Resolution
This Agreement shall be governed and interpreted under the laws of the State of , without regard to its conflict-of-law provisions.
Any disputes arising under this Agreement shall be resolved by:
Mediation
Binding Arbitration
Civil Litigation in the courts of
The prevailing party in any legal proceeding shall be entitled to recover reasonable attorney's fees and court costs.
13. Signatures
By signing below, the parties acknowledge that they have read, understood, and agreed to the terms of this Agreement.
ParticipantsSignatures-
Click to signJohn Doe
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Click to signJim Clark
