Loan Agreement Template (UK) (A116)

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Who can use this Loan Agreement?

Either an individual or a company that is making a loan to an individual. It is a straightforward document in plain English and designed for a straightforward arrangement between a lender and a borrower. It is in the form of a letter agreement.

For a loan to a company that is more formal see our Loan Agreement A109

What is a Loan Agreement for?

To record the terms agreed between the lender and the borrower. This benefits both of them as, without a clear and sufficiently detailed written record, there can be problems later on if there’s a difference of opinion on what was agreed about payment terms etc.

What are the main points for a Loan Agreement of this type?

  • Amount of loan
    How much is being lent and when will it be paid.
  •  Interest
    What is the rate of interest and is it fixed – e.g. 10% a year – or variable, e.g. 3% p.a. above Barclays Bank base rate. And when is interest payable – monthly, yearly etc., and is it due on the full amount or the outstanding balance.
  • Repayment
    Does the loan have to be repaid in instalments or in one amount at the end of an agreed period. And where is the payment of interest and principal to be made – e.g. bank account details.
  • Prepayment
    Can the borrower pay off the loan early without any penalty.
  • Restrictions
    Does the borrower need the lender’s consent before he/she can borrow from anyone else so long as any part of the loan remains outstanding.
  • Default
    What happens if the borrower doesn’t pay capital or interest on time.

What detailed terms does this Loan Agreement contain?

There are 10 paragraphs covering

  • loan amount
  • payment of interest
  • repayment of capital
  • prepayment
  • payment dates
  • default
  • undertakings
  • notices
  • assignment
  • waiver

For more information on each of these sections, see our Explanatory Notes which you will  receive when you download the Loan Agreement from our website.

Why is it a ‘Letter’ Agreement?

An agreement can be in the form of a letter which, in this case, is addressed to the borrower and signed by the lender. When the letter is accepted and signed by the borrower, it is an effective binding agreement just as a more formal agreement between Party A and Party B would be.

A letter agreement is in a more friendly style than an agreement written in the third person, and especially useful if the parties know each other and want a simple but effective deal.

For information on signing documents see our Contract Signing page

When I download the document, can I change it and/or use it more than once?

Yes.  All ContractStore’s templates are in MS Word and can be used more than once. A d, as well as filling in the details – names and addresses of the parties, amounts etc. – you can alter or add to it if you need some special terms.

For more information watch the video on this page of our website or see our FAQs

Legal Assistance

ContractStore supplies templates and is not a law firm. But all our templates are written by experienced lawyers. So, we can arrange legal assistance for customers who need special terms in one of our documents or a bespoke template. For more information see our Legal Services page.

And if you want to contact us by email or phone, or want a copy of our Explanatory Notes, details are on our contact page


If you have any questions about a contract and/or want to see the Explanatory Notes before you buy, please let us know by using our contact form

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