Create a Loan Agreement

Introduction

The preamble: date and place, the Lender and Borrower with the recital wording their entityType selects, and recitals that follow the loan's stage — a fresh private loan being recorded, or an existing debt being acknowledged and put on terms.

The Loan

The operative clause, branching on the loan's stage. FRESH_LOAN records the advance — already made (with date, mode and transaction reference, the record that turns bank transfers into a provable loan) or to be made on execution. EXISTING_DEBT renders the Borrower's signed written acknowledgment of a subsisting liability — the form that gives a fresh limitation period under Section 18 of the Limitation Act 1963 — with the debt then repayable on this Agreement's terms.

Interest

Whether the Loan carries interest. The friendly default is interest-free; when interest is charged it is simple interest at a stated rate per annum, with payments applied first to costs, then interest, then principal. Note for guidance, never for the paper: habitual lending at interest can attract state money-lending statutes — this instrument is for the occasional private loan.

Repayment

How the Loan comes back: in one lump sum by a stated date, or in monthly installments (amount, count and first date, with the aggregate computed so the schedule can never contradict the amounts). Prepayment is always allowed without penalty — the friendly posture this instrument exists to keep.

Payments and Evidence

The evidence mechanics the whole instrument exists for: every payment moves through a traceable banking channel (bank transfer, UPI, cheque — never cash), the transaction reference is agreed to be sufficient evidence of it, and the Lender gives a written closure acknowledgment on repayment in full.

Borrower's Confirmations

Short confirmations that keep the loan clean: the Borrower borrows in their own right and for no unlawful purpose, faces no insolvency proceeding, and confirms the notice address — and both Parties record that this is a private accommodation, not a money-lending business.

Default and Recovery

What happens when payment stops: a written demand, a stated number of days to make it good, then the entire outstanding balance falls due at once. Optional overdue interest from the due date, and the Borrower bears the reasonable costs of recovery. The written demand this clause contemplates is the Demand for Payment notice — the claims-side twin of this instrument.

Governing Law and Dispute Resolution

Applicable law, jurisdiction, and dispute resolution mechanism (courts or arbitration under Indian law).

General Provisions

The closing machinery: entire agreement, written amendments, notices, severability, no waiver by indulgence, counterparts, assignment (the Borrower may not; the Lender only on written notice), who bears the stamp duty, and the relationship confined to lender and borrower — expressly not a money-lending business.