Template Loan Agreement between Friends Uk

A template loan agreement between friends in the UK may seem unnecessary, but it can be a valuable tool to protect both parties in case of any misunderstandings or disputes. In this article, we will discuss the important components of a loan agreement and provide a sample template for your reference.

Why is a Loan Agreement Necessary?

Borrowing money from a friend or lending money to a friend may seem like a simple transaction, but it can often lead to complications. A loan agreement sets clear expectations and terms for the loan, including the amount borrowed, interest rate, repayment schedule, and consequences for defaulting on the loan.

Having a loan agreement in place can prevent misunderstandings and protect both parties in the event of a dispute. If a dispute arises, a loan agreement can be used as evidence in court to demonstrate the parties` intent and obligations.

Important Components of a Loan Agreement

1. Loan Terms: The loan terms should include the amount borrowed, the interest rate, and the repayment schedule. It should also specify the frequency of repayments, such as weekly, monthly, or quarterly.

2. Repayment Terms: The repayment terms should outline the consequences of defaulting on the loan, such as late fees or legal action. It should also specify the repayment method, such as direct deposit or cheque.

3. Signatures: Both parties must sign the loan agreement to indicate their understanding of the terms and their willingness to abide by them.

4. Collateral: If the loan is secured, the loan agreement should specify the collateral and its value. This is important in case of default, as the lender can seize the collateral to recoup their losses.

5. Governing Law: The loan agreement should specify the governing law in case of a dispute. In the UK, this is typically the law of England and Wales or Scotland.

Sample Template Loan Agreement Between Friends UK

[Loan Agreement Date] [Name of Lender] [Address of Lender] [City, State, Postcode] [Name of Borrower] [Address of Borrower] [City, State, Postcode]

Loan Terms:

Loan Amount: [Insert Amount]

Interest Rate: [Insert Interest Rate]

Repayment Schedule: [Insert Repayment Schedule]

Repayment Terms:

Late Fees: [Insert Late Fees]

Default Consequences: [Insert Default Consequences]


Lender Signature: ___________________________ Date: ___________

Borrower Signature: ___________________________ Date: ___________


[Insert Collateral]

Governing Law:

This loan agreement shall be governed by and construed in accordance with the laws of [Insert Governing Law].


In conclusion, a loan agreement between friends in the UK may seem unnecessary, but it can be a valuable tool in preventing misunderstandings and protecting both parties in case of a dispute. If you are considering lending money to a friend or borrowing money from a friend, it is recommended to have a loan agreement in place. Use the sample template provided above as a starting point for creating your own loan agreement.

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