Friends and family loan agreement

This is a simple loan agreement suitable for lending money to family or friends. It is intended to make clear to the borrower that the arrangement is for real and that the lender intends that the money should be repaid on time as agreed. It is ideal for lending in situations such as large one-off purchases, funding of events, and consolidation of other debts.
Suitable for use in: ACT, NSW, NT, QLD, SA, TAS, VIC and WA
  • Solicitor approved
  • Plain English makes editing easy
  • Guidance notes included
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About this loan agreement

Lending money to friends and family can be difficult.

The advantage of borrowing from friends or family members is that the lender is likely to know the borrower well and give better and more flexible repayment terms, such as a lower interest rate than a bank, or a gentler repayment schedule.

However, not using a written agreement can result in confusion about when the money should be repaid and with how much interest, or a loan could be mistaken as a gift or an investment, either by the borrower or other family members or friends.

A standard written agreement may seem too formal - especially if it is written in a legalistic style. It may prompt the borrower to question your relationship and whether you trust him or her.

This simple loan agreement, designed specifically for a loan to a friend or family member, aims to bridge the gap between not using an agreement at all, and using a longer, more comprehensive one.

Written in plain English and keeping length to a minimum, it allows you to record the loan terms in a legally binding contract that doesn't seem to question the integrity of the borrower but which does allow you to take action against the borrower if he or she doesn't pay you on time, or uses the loan for a reason not agreed.

When to use this agreement

Use this agreement when you want to record the loan, but where you have a high level of trust with the borrower.

This agreement could be used for long-term or short-term lending to a friend or family member, as examples: to buy a car, for a deposit on a home, to fund higher education or for an event such as a marriage.

Loan arrangements could include repayment in a single lump sum, or according to a repayment schedule. Charging interest is optional.

Either party may be abroad or in the Commonwealth of Australia, and the loan can be of any size.

This template contains no provisions for security or for a guarantor. If you need these, look at our other loan agreement templates or see the most likely alternatives below.

Alternatives to this document

If you need a more comprehensive agreement, but are happy for the loan to be unsecured, see our standard unsecured loan agreement.

If you need a guarantor, then see our agreement that is secured by guarantee.

The law in this document

There is little specific statutory law relating to personal lending, so you are free to agree the terms you want with the borrower. We give you options for different situations.

Drawn outside the National Consumer Credit Protection Act 2009, this agreement is not suitable for companies in the business of lending or providing credit to consumers.

The contents of the agreement

  • Definition and purpose of the loan
  • Sum of the loan and advances
  • Repayment conditions
  • Interest payable
  • Miscellaneous legal matters

This template is supported by drafting notes that explain how to edit it for your loan arrangements. Our layout and use of plain English make it very easy to edit by deletion.


This document was written by a solicitor for Net Lawman. It complies with current Australian law.

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