Free Individuals & Personal generator
Personal Loan Agreement & Promissory Note
A clear, enforceable IOU between two people, with optional interest, a repayment schedule, and up-to-date security and default terms.
What is a Personal Loan Agreement & Promissory Note?
A Personal Loan Agreement & Promissory Note is a clear, enforceable IOU between two people. It can carry interest or not, sets a repayment schedule, and includes up-to-date security and default terms.
Built for people lending or borrowing money privately who want the terms in writing so nobody misremembers them: family, friends, a small business owner fronting cash, or a founder lending their own company money.
Personal Loan Agreement & Promissory Note template, current for 2026
The interview builds a full amortization schedule inline, payment by payment. It prompts for the state usury ceiling and flags interest-free loans against the current IRS Applicable Federal Rate and the imputed-interest rule. The document adds e-signature and remote online notarization language, covers acceleration, prepayment without penalty, and a cure period, and treats SMS and email as valid notice.
How HDAi does this differently
Unlike a static form, HDAi runs a guided interview and assembles your Personal Loan Agreement & Promissory Note as you answer. When you want it finished, a licensed Hart David Carson attorney reviews it and tailors it to your facts before you sign. The interview and the first draft are automated. The judgment belongs to an attorney.
What you’ll be asked
A short interview in plain language that asks only what this document needs.
- What is the date of this loan agreement? This is the date the agreement is signed and takes effect. It anchors all deadlines and the interest start date.
- Which U.S. state's law governs this loan? Loan and usury rules vary by state. This sets the legal home for the agreement and caps the maximum lawful interest rate.
- Who is lending the money (the Lender)? The person or entity providing the funds. We collect a legal name and address to identify the party and for notices.
- Who is borrowing the money (the Borrower)? The person or entity receiving and repaying the funds. Identified for enforceability and notices.
- Is there a co-signer or guarantor? A co-signer promises to pay if the Borrower doesn't. This adds a backstop for the Lender.
- Who is the co-signer / guarantor? We identify the guarantor by legal name and address so their promise is binding.
- How much is being loaned (principal amount, in USD)? The face amount of the loan. Repayment and interest are calculated off this number.
- Write the principal amount in words. Spell out the amount without the word 'Dollars' (the document adds it). This reduces disputes if the numeral is ever misread.
- How will the funds be delivered to the Borrower? Documents when and how the loan is actually advanced, which fixes the Borrower's receipt.
- What is the loan for? (optional) Stating the purpose is optional. It can clarify intent and support the position that this is a bona fide loan rather than a gift.
- Are the Lender and Borrower family members or otherwise related parties? Loans between family or related parties draw closer IRS scrutiny. If interest is below the Applicable Federal Rate, the IRS may impute interest under IRC 7872. This flag adds stronger tax-acknowledgment language.
- Does the loan charge interest? An interest-free loan is allowed between individuals, but choosing this affects tax treatment and total cost.
- What is the annual interest rate (percent)? The yearly rate applied to the outstanding principal. Keep it below your state's usury cap, and at or above the current IRS Applicable Federal Rate to avoid imputed interest.
- How is interest calculated? Simple interest accrues only on principal; compound interest accrues on unpaid interest too, raising the total.
- If compounding, how often does interest compound? More frequent compounding increases the effective rate the Borrower pays.
- How will the loan be repaid? This is the core repayment mechanic. It determines the schedule and the Borrower's obligations.
- What is the maturity / final due date? The date by which all remaining principal and interest must be fully paid.
- How often are payments due? Sets the cadence of installment or interest-only payments.
- How many scheduled payments are there in total? The total number of installment or interest-only payments from the first payment through maturity. This drives the Exhibit A repayment schedule. If unsure, count the periods between the first payment date and the maturity date.
- What is the amount of each scheduled payment (USD)? The dollar figure due each period. For amortized loans this covers principal and interest.
- When is the first payment due? Starts the payment clock and sets the recurring due date each period.
- How should payments be made? Specifying the method avoids disputes about whether and how a payment was made.
- May the Borrower prepay without penalty? Prepayment lets the Borrower pay early and save on interest. Some lenders want a penalty, but most personal loans allow free prepayment.
- Describe the prepayment fee. Defines what the Borrower owes for paying early.
- Is there a late fee for missed payments? A late fee compensates the Lender and encourages on-time payment. Keep it reasonable to avoid being an unenforceable penalty.
- What is the late fee? The specific charge applied when a payment is late.
- How many days of grace before a payment is late? A grace period gives the Borrower a short cushion before late fees or default kick in.
- What is the default interest rate after default (percent per year)? (optional) A higher rate that applies to overdue amounts after default. Must stay within your state's usury cap.
- Is the loan secured by collateral? Collateral gives the Lender the right to take specific property if the Borrower defaults, strengthening the loan.
- Describe the collateral securing the loan. A precise description is required to create an enforceable security interest under the UCC.
- Is the collateral a titled asset (e.g., a vehicle, boat, or trailer with a certificate of title)? Titled assets require the Lender's lien to be noted on the certificate of title to be perfected, rather than through a UCC filing alone.
- How many days does the Borrower have to cure a default after notice? A cure period lets the Borrower fix a missed payment before the full balance can be accelerated.
- Should the losing party pay the other's attorneys' fees in a dispute? A fee-shifting clause makes it more affordable for the Lender to enforce, and discourages frivolous disputes.
- How should disputes be resolved? Controls where and how a fight over the loan gets decided: court, or private arbitration.
- Which county's courts (or arbitration seat) is the venue? Fixes the location for any lawsuit or arbitration, so neither side is dragged somewhere inconvenient.
- Will the parties have their signatures notarized? Most personal loans do not require notarization. It strengthens enforceability, though, and is often required to record a lien on titled collateral. The document supports in-person and remote online notarization (RON).
- In which state will the notarization occur? The notary's commissioning state governs the acknowledgment and any remote online notarization. It may differ from the governing-law state if a party signs elsewhere.
- Lender's mobile number for text (SMS) notices? (optional) Only needed if you want to permit routine notices by text message. Formal legal notices still require writing.
- Borrower's mobile number for text (SMS) notices? (optional) Only needed if you want to permit routine notices by text message. Formal legal notices still require writing.
- Any additional terms or special conditions? (optional) Anything unique to your arrangement that the standard sections don't cover.
Frequently asked
About the Personal Loan Agreement & Promissory Note and how HDAi works.
What is a Personal Loan Agreement & Promissory Note? +
A Personal Loan Agreement & Promissory Note is a clear, enforceable IOU between two people. It can carry interest or not, sets a repayment schedule, and includes up-to-date security and default terms. It suits family members, friends, a small business owner fronting cash, or a founder lending their own company money, whenever the parties want the terms in writing so nobody misremembers them.
Is HDAi's Personal Loan Agreement & Promissory Note legally binding? +
The Personal Loan Agreement & Promissory Note HDAi generates is a professionally drafted document that becomes binding once it is completed, reviewed, and properly signed. If you want a licensed Hart David Carson attorney to finish it, book a planning call. The firm's flat-fee packages, the Illinois Family Plan and Company Launch, cover the most common needs; for any other draft, an Illinois attorney will tell you on the call what finishing it would involve.
Do I need a lawyer to use this Personal Loan Agreement & Promissory Note? +
You can generate and download the Personal Loan Agreement & Promissory Note in minutes, free of charge. A licensed Hart David Carson attorney can then review it and tailor it to your facts before you sign, which is the part no template can do.
What makes this Personal Loan Agreement & Promissory Note current for 2026? +
The interview builds a full amortization schedule inline, payment by payment. It prompts for the state usury ceiling and flags interest-free loans against the current IRS Applicable Federal Rate and the imputed-interest rule. The document adds e-signature and remote online notarization language, covers acceleration, prepayment without penalty, and a cure period, and treats SMS and email as valid notice.
How long does the Personal Loan Agreement & Promissory Note take? +
Estimated time about 20 min (40 questions), depending on how much you already know. The document assembles as you answer. Export it as PDF or Word, or send it to a Hart David Carson attorney for review.
Does this Personal Loan Agreement & Promissory Note work in my state? +
HDAi's interview is state-aware. If you ask an attorney to finish the draft, a licensed Hart David Carson attorney confirms it against your state's requirements before you rely on it. Validity and required formalities vary by state.
Individuals & Personal
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