What is this document?
A loan agreement (also called a lending agreement or money lending agreement) is a contract where one party lends money to another on agreed terms. It specifies the principal, rate of interest (subject to applicable usury and money-lending laws), tenure, repayment mode, prepayment rights, security if any, and events of default. A written agreement supports legal recovery and clarifies tax and interest reporting obligations.
When do you need it?
- Lending money to a friend or family member with formal terms
- Documenting a business loan between partners or companies
- Recording a private loan secured against property or assets
- Restructuring an existing informal loan with new repayment terms
- Supporting income tax or accounting records for interest income
Key clauses and elements
- Parties — lender and borrower names, addresses, and contact details
- Loan amount and disbursement — principal sum and payment date
- Interest — rate, calculation method, and compounding if applicable
- Repayment — EMI schedule, due dates, or bullet repayment
- Security and guarantor — collateral or third-party guarantee if any
- Default and remedies — late fees, acceleration, and legal notice requirements
- Governing law — laws of India and jurisdiction for disputes
Frequently asked questions
Related documents
DraftPe helps you generate a clear loan agreement formatted for Indian use. The wizard captures lender and borrower details, principal amount, interest terms, EMI or lump-sum repayment, security or guarantor provisions, and default remedies.
Review what a loan agreement should include below, then complete the wizard to create your document.