Create a professional family loan agreement in minutes. Customize terms, download as PDF, and get started with your family loan.
A family loan agreement is a written contract between relatives that records the loan amount, interest rate, repayment schedule, and what happens if payments stop. In the US, a signed agreement, a fixed repayment schedule, interest and actual repayments are among the factors the IRS and courts look at when they decide whether money was a loan or a gift.
This tool generates loan agreement templates for informational purposes only. They are not a substitute for the advice of an attorney. Family Loan Tracker is not a law firm, financial institution, tax advisor or licensed financial advisor, and we do not provide legal, tax or financial advice. For large amounts, secured loans or complex situations, have a qualified attorney review the agreement.
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A family loan agreement is a formal document that outlines the terms and conditions of a loan between family members. While it may seem informal to lend money to family, having a proper agreement in place is crucial for protecting both parties and maintaining healthy family relationships. Our free agreement generator helps you create a document that covers the main terms of the loan.
Every family loan agreement should clearly specify the loan amount, purpose, and repayment schedule. Our generator helps you set up flexible payment terms that work for both parties, whether it's monthly installments or a lump sum payment.
While family loans often have lower interest rates than traditional loans, it's important to set a fair rate that works for both parties. Our tool helps you document your agreed-upon interest rate and payment terms clearly in the agreement.
Clear terms for handling late payments or defaults help prevent misunderstandings. The generated agreement gives the borrower written notice and 30 days to catch up before the full balance can be demanded, and you can add a late fee.
Our free agreement generator helps you create professional loan documents for family loans. You can customize the terms to match your specific needs and download the agreement in PDF format.
But that's just the beginning. Once you've created your agreement, you can convert it into a tracked loan in Family Loan Tracker, which then lets you:
Whether you're lending to family members or borrowing from them, our integrated solution helps you manage your family loans professionally and efficiently.
Not every family loan is a single lump sum. Parents often help in stages: a first payment toward a home deposit, another for renovations, a third when tuition is due. A family line of credit agreement documents each of these draws separately, with its own amount and date, under one credit limit.
Our generator supports this directly. Turn on the line of credit option, add your planned draws, and the agreement lists them in the loan details. Interest accrues only on money actually advanced, which usually means a lower total cost for the borrower than a lump sum loan.
A good agreement starts with realistic numbers. These free tools help you set the terms:
Generally, yes. A loan between relatives is a contract like any other when both parties intend to be bound, agree on the essential terms and are able to contract, and a signed written agreement is the clearest proof of that. Whether a particular agreement holds up depends on the law where you live, so have a local attorney review large or secured loans. A witness or notary is not usually required, but it can help prove who signed.
At minimum it should name the lender and borrower and record the loan amount, interest rate, repayment schedule, and signatures. A complete agreement also covers the installment amount and due dates, late fees, prepayment, collateral, default terms, governing law, and how disputes are resolved. Our family loan agreement generator includes these sections and lets you switch the optional ones on or off.
Not as such, but it matters for tax. Under US tax rules (Internal Revenue Code section 7872), a loan that charges less than the Applicable Federal Rate (AFR) can be treated as if the lender received interest at that rate and gave the difference to the borrower as a gift. There are exceptions, for example for most gift loans of $10,000 or less. You can look up the current rates with our free AFR calculator; a tax advisor can tell you how the rules apply to your loan.
Yes. Turn on the line of credit option to document staged draws instead of a single lump sum. The agreement lists each draw with its amount and date, and interest accrues only on the money actually advanced. This works well for ongoing support like tuition or a phased home renovation.
Yes. Turn on Variable interest rate and name the reference rate the loan follows, such as the prime rate, with an optional margin, the date of the first change and how often it changes after that. The agreement then states that earlier interest is not recalculated and that the payment is recalculated after each change. In Family Loan Tracker you record each new rate as a dated rate change, so the schedule matches the agreement.
That is up to you. The generator includes a prepayment clause you can set to allow early repayment without penalty, or to require the lender's written consent first. A prepayment reduces the principal; interest for the current period is still based on the balance at the start of that period. You also choose whether a prepayment shortens the loan or lowers the installments, and the agreement says which.
Generally, no: a loan agreement is usually valid with the signatures of the parties, and a witness or notary mainly helps prove who signed. Some related documents do need a notary, such as a mortgage or deed of trust that will be recorded against real estate. The generator can add a witness block and a US notary acknowledgment.
Add the loan to Family Loan Tracker to follow payments, interest, and the outstanding balance. The installment amount and due dates in the agreement are calculated the same way as the schedule in the tracker. The terms are stored with the loan, so you can download a new copy of the PDF anytime; keep the copy you both signed, because that is your agreement.
Use our free family loan agreement generator to create professional, well structured documents in minutes. Download your agreement as a PDF and start managing your family loan with confidence.