# PERSONAL LOAN AGREEMENT
## Important legal, jurisdiction and formality warning
This is a fictional worked example, not legal advice, a credit agreement approved by a regulator, or a guarantee that these terms are suitable or enforceable. It is written for a private loan between individuals in England and Wales. The Financial Services and Markets Act 2000, the Consumer Credit Act 1974, Financial Conduct Authority requirements, unfair-terms rules, tax rules, insolvency law, limitation rules and any lender or borrower status may change the analysis. A loan to a consumer, a repeated lending business, a secured loan, a loan to a vulnerable person or a loan involving a company may require different documentation, permissions, disclosures or advice. Both parties should take independent advice before signing. Do not transfer money until identity, capacity, affordability, lawful source of funds and any required regulatory requirements have been checked. This agreement does not create a mortgage or other security over land.
Agreement date: 1 April 2027
## 1. Parties
This agreement is made between Eleanor Ruth Whitcombe of 28 Orchard Rise, Shrewsbury SY3 7QN, email eleanor.whitcombe@example.test, called the Lender, and Marcus Daniel Whitcombe of 41 Alderbank Road, Telford TF2 8LP, email marcus.whitcombe@example.test, called the Borrower. Eleanor and Marcus are adults. They are siblings. Each confirms that the address and contact details stated in this agreement are current on the Agreement date.
The Lender's payment account is an account with Marchfield Bank ending 2846. The Borrower's receiving account is an account with Marchfield Bank ending 9173. The last four digits are included only to identify the intended accounts; neither party should put full bank details in an unsecured copy of this agreement.
## 2. Loan and permitted purpose
The Lender agrees to lend the Borrower £12,000.00, being twelve thousand pounds sterling. The Borrower must use the money for the renovation of the kitchen and roof at 41 Alderbank Road and for no unlawful purpose. The Borrower must not represent that the Lender owns the property or has an interest in it. This agreement gives the Lender no charge, restriction, beneficial interest or right to occupy the property.
The Lender will transfer the principal in one payment to the Borrower's receiving account on 3 April 2027, subject to the parties having signed this agreement. The Borrower must confirm receipt by email on the day of transfer. If the transfer arrives after 3 April 2027, the date of actual receipt is the advance date. Unless the parties agree otherwise in writing, every scheduled instalment date in clause 3 shifts by the same number of calendar days as the delay, and no instalment is due before the Borrower receives the principal.
The parties have checked the arithmetic before signing. The principal is £12,000.00. The fixed interest charge for the entire term is 6 per cent of the original principal, not an annual rate and not compounded: £12,000.00 multiplied by 0.06 equals £720.00. The total amount payable if every scheduled payment is made on time is therefore £12,720.00, calculated as £12,000.00 plus £720.00.
## 3. Term and instalments
The term begins on the advance date and ends when all sums due under this agreement have been paid. The Borrower must pay 24 equal monthly instalments of £530.00. The calculation is £12,720.00 divided by 24, which equals £530.00. Each instalment includes an allocation of £500.00 toward principal and £30.00 toward the fixed interest amount. The parties agree that this allocation is an accounting explanation only; the total fixed interest does not increase because of a delay, nor does it reduce except as stated in the early repayment clause.
The listed instalment dates below assume that the £12,000.00 advance is received on 3 April 2027. If clause 2 shifts the schedule because the advance is received later, the shifted dates replace the dates listed below; each shifted date is calculated by adding the same delay to the corresponding listed date and may not fall on the first day of a month:
* 1 May 2027: £530.00 * 1 June 2027: £530.00 * 1 July 2027: £530.00 * 1 August 2027: £530.00 * 1 September 2027: £530.00 * 1 October 2027: £530.00 * 1 November 2027: £530.00 * 1 December 2027: £530.00 * 1 January 2028: £530.00 * 1 February 2028: £530.00 * 1 March 2028: £530.00 * 1 April 2028: £530.00 * 1 May 2028: £530.00 * 1 June 2028: £530.00 * 1 July 2028: £530.00 * 1 August 2028: £530.00 * 1 September 2028: £530.00 * 1 October 2028: £530.00 * 1 November 2028: £530.00 * 1 December 2028: £530.00 * 1 January 2029: £530.00 * 1 February 2029: £530.00 * 1 March 2029: £530.00 * 1 April 2029: £530.00
The 24 payments total £12,720.00, calculated as 24 multiplied by £530.00. If all payments are made, the principal allocation totals £12,000.00 and the interest allocation totals £720.00. The Borrower must pay by standing order to the Lender's nominated account using the reference MW-LOAN-2027. A payment is made when cleared funds reach that account, not merely when a standing order is sent.
If a due date is not a banking day, payment must arrive on the preceding banking day. The Lender must tell the Borrower in writing at least five banking days before changing the nominated account. The Borrower must not send cash or make a payment to an account stated only in an unverified message.
## 4. Early repayment
The Borrower may repay all or part of the outstanding balance early by giving the Lender at least five banking days' notice. There is no early repayment fee. If the Borrower repays in full before the final due date, the amount required is the unpaid principal allocation plus the unpaid portion of the fixed interest allocation that has not yet been paid, unless a mandatory rule requires a different calculation or prevents charging some or all of that interest. For an agreed part-payment, the parties must confirm in writing whether it reduces future instalments or shortens the term. Unless they agree otherwise, a part-payment reduces the final scheduled instalment first and then earlier scheduled instalments.
The parties will keep a payment ledger. For example, after six timely payments, £3,180.00 will have been paid, calculated as six multiplied by £530.00. On the agreed allocation, £3,000.00 will have been allocated to principal and £180.00 to fixed interest, leaving £9,000.00 of principal allocation and £540.00 of interest allocation. The ledger is evidence of payments, not a variation of this agreement.
## 5. Borrower's promises
The Borrower promises to keep a current address and email address, tell the Lender within seven days about a material change affecting ability to pay, use the loan lawfully, and not knowingly give false information about payment or financial circumstances. The Borrower does not promise that the renovation will increase the property's value. The Borrower remains responsible for contractors, planning, building regulations, insurance, mortgage conditions and all costs connected with the renovation.
The Borrower may make a payment from any lawful source. The Borrower must not ask the Lender to conceal the loan from a mortgage lender, benefits authority, tax authority, insolvency practitioner or court where disclosure is required. The parties will cooperate with reasonable identity and source-of-funds checks.
## 6. Missed payment and default
If a payment is not received by the due date, the Lender must write to the Borrower identifying the missed amount and allow ten calendar days after delivery to correct it. The Borrower may explain a banking error or propose a short payment date. The Lender will consider a reasonable proposal in good faith but is not obliged to waive a payment.
An event of default occurs if the Borrower fails to correct a missed payment within that period, deliberately gives materially false information, becomes bankrupt, enters an individual voluntary arrangement, or states in writing that the Borrower will not pay. Before demanding early payment, the Lender must give a written default notice describing the event and the amount claimed, unless a mandatory law requires a different notice or prevents acceleration.
After a valid acceleration notice, the Lender may demand the outstanding amount that is lawfully due, subject to any statutory notice, affordability, unfair-relationship, insolvency or other protection. The Lender must credit every payment received and must not charge a penalty merely because the Borrower was late. A reasonable documented cost of an agreed bank transfer is not a penalty. The Lender does not charge additional interest in this worked example.
Nothing in this clause permits harassment, repeated unreasonable contact, disclosure of the debt to neighbours or family members who are not parties, unlawful entry, seizure of property or self-help enforcement. The Lender must use a lawful process and may seek advice before taking action.
## 7. Changes, notices and records
Any change to the amount, payment dates, interest, term, purpose or parties must be in a dated document signed by both parties. An informal conversation does not vary this agreement. A notice must be sent by recorded post to the address in clause 1 or by email to the address in clause 1, with a copy retained. A notice sent by recorded post is deemed received at 9.00 am on the second banking day after posting, unless it was actually received earlier. A notice by email is received when no delivery failure message is received, unless the sender knows it did not reach the recipient.
The parties will retain this signed agreement, the transfer confirmation, the standing-order instruction and the payment ledger. Personal information must be stored securely and used only for administration, accounting, legal compliance, advice, enforcement or another lawful purpose. A party must not publish the other party's personal details.
## 8. Law and jurisdiction
This agreement is intended to be governed by the law of England and Wales. The courts of England and Wales have jurisdiction, subject to any mandatory consumer-credit, insolvency, limitation or other rule. Before issuing a claim, the parties will exchange a concise account, payment ledger and proposed resolution and will consider mediation if it is safe and proportionate. This does not prevent urgent protective action or a mandatory procedure.
If one provision is invalid or unenforceable, it will be read down or severed only to the extent necessary, and the remaining provisions continue. A delay in enforcing a right is not a waiver. This agreement records the entire private loan arrangement known to the parties on 1 April 2027 and supersedes their earlier informal discussion about this loan, but it does not exclude any liability that cannot lawfully be excluded.
## 9. Signatures
The parties sign after reading the agreement and having the opportunity to obtain independent advice. The witness confirms that the relevant person signed or acknowledged the signature in the witness's presence. Witnesses are adults and are not parties to this agreement.
Signed by the Lender, Eleanor Ruth Whitcombe:
Signature: __________________________
Date signed: 1 April 2027
Witness signature: __________________________
Witness name: Nisha Calder
Witness address: 9 Briar Lane, Shrewsbury SY2 6RA
Witness occupation: Architectural technician
Signed by the Borrower, Marcus Daniel Whitcombe:
Signature: __________________________
Date signed: 1 April 2027
Witness signature: __________________________
Witness name: Nisha Calder
Witness address: 9 Briar Lane, Shrewsbury SY2 6RA
Witness occupation: Architectural technician