Simple Loan Agreement: Free Template 2026

If you lend money without a contract, you are carrying unnecessary legal and financial risk. A simple loan agreement is the first step to making your activity professional, whether you are a lender, a daily collector or a business owner who sells on credit.

A well-drafted contract does several jobs at once:

• Legal force: it backs any collection action, in or out of court
• Clear terms: it eliminates misunderstandings about amounts, dates and rates
• Documentary proof: in a dispute, the contract is your evidence
• Professional seriousness: customers take a documented loan more seriously
• Credit history: with documents you can build a record of your borrowers

Research on informal lending shows that lenders who use written contracts recover their loans more effectively than those operating on verbal agreements alone.

The best part: a simple loan agreement does not necessarily require a notary for small and medium amounts. A document signed before witnesses already carries legal weight in most Latin American countries.

A valid loan agreement must contain at least the following:

• 1. Identification of the parties: full name, ID number, address and phone of the lender (creditor) and the borrower. If there is a guarantor or co-signer, they appear too, with their own details.
• 2. Loan amount: the exact sum lent, in figures and in words (e.g. “$500,000 COP — five hundred thousand Colombian pesos”). This prevents alteration.
• 3. Interest rate: the percentage applied, the period (daily, weekly, monthly) and the type (simple or compound). Make sure you stay under your country’s legal maximum.
• 4. Term and payment schedule: start date, final due date, installment frequency (daily, weekly, fortnightly, monthly) and the amount of each installment.
• 5. Late charges: what happens if the borrower does not pay on time. It can be additional default interest or a fixed penalty.
• 6. Collateral (if any): if the loan is secured against property, a vehicle, an appliance or another asset, that has to be stated clearly.
• 7. Signatures and date: the signature of both parties, of witnesses if there are any, and the date of the agreement.

With CobrApp you keep a digital record of every loan with all of these details organized, backed up in the cloud and reachable from your phone at any moment.

Here is a simple loan agreement template you can adapt to your needs:

LOAN AGREEMENT (PERSONAL LOAN OF MONEY)

Between the undersigned, [LENDER'S NAME], holder of [ID TYPE] No. [NUMBER], hereinafter THE LENDER, and [BORROWER'S NAME], holder of [ID TYPE] No. [NUMBER], residing at [ADDRESS], hereinafter THE BORROWER, this loan agreement is entered into under the following terms:

FIRST — AMOUNT: THE LENDER delivers to THE BORROWER the sum of $[AMOUNT IN FIGURES] ([AMOUNT IN WORDS]), as a loan.

SECOND — INTEREST: The loan shall accrue interest at a rate of [X]% [daily/weekly/monthly] on the outstanding balance.

THIRD — TERM AND INSTALLMENTS: THE BORROWER undertakes to repay the loan in [N] [daily/weekly/monthly] installments of $[INSTALLMENT AMOUNT] each, beginning on [FIRST INSTALLMENT DATE] and ending on [LAST INSTALLMENT DATE].

FOURTH — DEFAULT: In the event of default, THE BORROWER shall pay additional default interest of [X]% [monthly/daily] on the overdue balance.

FIFTH — EARLY REPAYMENT: THE BORROWER may repay the total owed ahead of schedule, paying only the interest accrued up to the date of payment.

SIXTH — CO-SIGNER (if applicable): [CO-SIGNER'S NAME], holder of [ID TYPE] No. [NUMBER], hereby becomes a joint and several co-signer of this loan.

In witness whereof, signed in [CITY], on the [DAY] day of [MONTH], [YEAR].

_________________________          _________________________
THE LENDER                          THE BORROWER
[Name]                              [Name]
ID: [Number]                        ID: [Number]

_________________________
WITNESS
[Name and ID]

One of the gravest mistakes informal lenders make is charging rates above their country’s legal limits. That is called usury, and it can end in lawsuits, fines or even criminal charges.

Reference for approximate maximum rates in several Latin American countries (always check the current rules):

Practical advice: before agreeing a rate, check the website of your country’s central bank or financial regulator for the ceiling in force that month. CobrApp calculates the interest automatically — you enter the rate and the system does the rest.

The paper contract is the starting point, but digital management is what really transforms a lending business. CobrApp complements your physical contracts with a complete digital system:

• Digital record of every loan: enter amount, rate, term and customer in seconds. CobrApp generates the payment plan automatically.
• Automatic interest calculation: daily, weekly or monthly — with no arithmetic errors working against you.
• Due-date alerts: CobrApp tells you when each installment falls due so you can act in time.
• Digital receipts: every payment received produces a PDF receipt you can send to the borrower on WhatsApp — professional and at no extra cost.
• Payment history: see exactly what each customer has paid, when, and what is left.
• Real-time portfolio: a dashboard with total lent, collected this month and active arrears.
• Cloud backup: your data is safe even if you lose or break your phone.

With the paper contract as legal backing and CobrApp as your day-to-day management tool, you get the best of both worlds: legal protection and digital control of your portfolio.

Microfinance research shows that lenders who digitize their management recover more debt and lose less to arrears than those keeping records on paper or in spreadsheets.