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Family loan agreement draft
General discussion draft for a monthly installment loan. Review legal and tax requirements before signing. No electronic signatures are collected.
Draft incomplete: enter both parties, principal, rate, payment count, dates, and payment instructions.
On [Loan date], [Lender] intends to lend [Principal] to [Borrower]. The borrower agrees, upon signing the final reviewed agreement, to repay the principal and interest under the terms below.
Interest and repayment
Annual interest rate: 0%. Interest is calculated monthly on the outstanding principal at the annual rate divided by 12 and rounded to the nearest cent. Payments are applied to that month’s interest first, then principal. No new borrowing or additional fees are included in the schedule below.
[Enter loan amounts and term to generate the installment schedule.]
Payment instructions
[Specify payment method and recipient details.]
Additional terms for review
[Specify late-payment handling, prepayment, amendments, governing law, and any other agreed terms before signing.]
This draft does not create a security interest or guarantee enforceability. Local interest limits, required disclosures, and tax treatment need review. The parties should fill all placeholders and agree on all terms before signing.
Record who is lending and borrowing, the amount, interest rate, monthly term, first due date, and payment method. The schedule uses the monthly interest method printed in the draft. The final payment adjusts for rounding and any remaining balance.
This general template does not determine legal enforceability, permissible interest rates, or tax obligations. Interest-free or below-market family loans can have tax implications; review the IRS guidance on below-market loans and obtain appropriate advice for your situation.
The CFPB’s family lending worksheet can help frame the discussion. Save and share your draft for review, then sign outside this tool after completing the terms.
To plan payments across several existing debts, use the debt payoff planner.