Create a complete loan agreement between a lender and a borrower, for a personal loan to a friend or family member or a loan to a business. Set the amount, interest, repayment plan, collateral and default terms, and the agreement and its repayment schedule are written as you type. Download a PDF or Word file.
Last updated:
Payment–
Total interest–
Total repaid–
Final payment–
This template is general information, not legal advice. Interest-rate caps, licensing rules for lenders, security-interest filing and signing formalities differ by state and country. Have a lawyer review large or business loans.
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How to use the Loan Agreement Generator
Choose personal or business loan and describe what the money is for.
Enter the lender and borrower: legal names, whether each is a person or a company, and addresses. Add a guarantor if someone else backs the loan.
Set the loan terms: amount, interest rate, agreement date, funding date and how the money will be paid out.
Pick the repayment plan, number of payments and first payment date, then add late fee, collateral and default terms.
Review the live agreement and the summary of payments, then download the PDF or Word file and have everyone sign.
What goes into a loan agreement
Section
What it settles
Why it matters
The Loan and funding
Exact amount, how and when the money is paid out
Proves the borrower received the funds and fixes the date interest starts
Interest and repayment
Rate, number and size of payments, maturity date
Removes any doubt about what is owed and when
Prepayment and late charge
Whether early payoff is allowed; fee and grace period for late payments
Lets the lender act early if the borrower's situation changes
Default and remedies
What counts as default, notice and cure period, acceleration
Spells out a fair, step-by-step process if things go wrong
Example: one loan, three repayment plans
$15,000 at 6% per year, funded on the first day of a month.
Plan
Payments
Total interest
36 equal monthly installments
36 × about $456.33
about $1,428
Interest-only for 36 months, then balloon
35 × $75.00, then $15,075.00
$2,700
Lump sum after 365 days
1 × $15,900.00
$900
Monthly interest on an amortized loan is the remaining balance × (annual rate ÷ 12). Early payments are mostly interest and later ones mostly principal, which is why paying extra early saves the most.
Tips before you sign
Pay the loan out traceably (bank transfer or check) so there is a record that matches the funding date.
Use full legal names; for a company, its registered name, state of formation and the title of the person signing.
Record the collateral: put the lender on the vehicle title or file a UCC-1 for business equipment, or the security interest may not hold against other creditors.
Keep a payment ledger. The schedule CSV works as a checklist of due dates.
Sign two originals so the lender and the borrower each keep one.
Frequently asked questions
What is the difference between a loan agreement and a promissory note?
A promissory note is a short, one-sided promise by the borrower to repay. A loan agreement is a two-sided contract signed by both lender and borrower that also covers the purpose of the loan, how and when the money is paid out, the borrower's statements and promises, events of default and the lender's remedies. Larger and business loans usually use a loan agreement, sometimes together with a note.
How is the monthly payment calculated?
For equal installments the standard amortization formula is used: payment = P x r / (1 - (1 + r)^-n), where P is the loan amount, r is the annual rate divided by the number of payments per year, and n is the number of payments. For example, $15,000 at 6% over 36 monthly payments is about $456.33 per month. With a 0% rate the payment is simply P / n.
When does interest start?
In this template interest accrues from the funding date, the day the borrower actually receives the money, not the signing date. For a lump-sum loan the interest is simple interest: principal x rate x days / 365 from the funding date to the due date.
What makes a loan secured?
A secured loan names specific property, the collateral, that the lender may take if the borrower defaults. For vehicles the lender is usually listed as lienholder on the title; for business equipment a UCC-1 financing statement is often filed with the state. The agreement grants the security interest, but recording it is a separate step.
Do I need a guarantor?
A guarantor is a third person who agrees to pay if the borrower does not. Lenders often ask for a personal guarantee from the owner when lending to a small company, because the company alone may have few assets. It is optional for personal loans.
Does a loan agreement need to be notarized?
In most US states a loan agreement is binding when signed by both parties, without a notary. Notarization or a witness adds proof that the signatures are genuine, and some lenders require it. Loans secured by real estate need a separate mortgage or deed of trust that is notarized and recorded.
Can I charge any interest rate I want?
No. State usury laws set maximum interest rates for many loans, and the limits vary. In the US, the IRS may also treat family loans above $10,000 at very low rates as partly a gift unless they charge at least the Applicable Federal Rate. The template includes a maximum-lawful-interest clause, but you should choose a lawful rate.
Are all the tools on FreeToolCabin tested for quality and accuracy?
Yes! Every tool on our site undergoes automated Q/A testing in real browser environments to ensure high precision, correct output, and zero errors. If you happen to spot a bug or have a suggestion, please contact us at [email protected] and our team will review it right away.