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How to Write a Loan Agreement Singapore: Free Template Inside

man hands signing personal loan agreement
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How do you safeguard both yourself and the lender when borrowing money? Legal experts emphasize the critical role of loan agreements in providing protection for both parties. These agreements should clearly outline the loan amount, repayment schedule, interest rate, and other essential details.

Investopedia highlights that a personal loan agreement must explicitly state the interest rate and payment schedule to prevent misunderstandings and disputes and make it enforceable in court.

In this article, you’ll find a comprehensive loan agreement template for Singapore. We’ll also cover the different types of agreements, key components, essential clauses, and practical tips for drafting digital and handwritten agreements.

What Is a Loan Agreement?

A loan agreement is a written contract between the lender and the borrower. It memorializes the loan transaction and can be used in court if one party fails to fulfill the agreement. It is a single document that contains all the terms of the loan and is signed by both parties. 

Key legislation governing loan agreements in Singapore includes the Moneylenders Act and Moneylenders Rules 2009, which set strict guidelines for licensed moneylenders and cap maximum interest rates to ensure fair practices. Additionally, the Contracts (Rights of Third Parties) Act allows third parties to enforce contract terms, providing an extra layer of protection for all involved parties.

The following details must be included in the document:

  • Identity of the parties (lender and borrower)
  • Guarantor information (if any)
  • Date of agreement
  • Loan amount
  • Interest charged
  • Repayment terms
  • Default provisions
  • Signatures of each party
  • Signatures of each witness

By signing the loan agreement, the borrower promises that the borrowed money, including interest, will be repaid to the lender at the agreed future date. On the other hand, the lender promises to lend the loan amount stated in the agreement.

happy couple signing paperwork at office

How to Write a Loan Agreement

By following these steps and including common clauses, you can create a comprehensive and legally sound loan agreement that protects the interests of both the party lending money and the borrower.

Step-by-Step Guide

  1. Identify the Parties Involved: Begin by clearly identifying the lender and the borrower. Include full legal names, addresses, and contact information. This ensures that both parties are unmistakably recognized in the agreement.
  2. Specify the Loan Amount and Terms: Clearly state the principal amount being loaned and outline the terms of the loan. This includes the duration of the loan and any specific conditions agreed upon by both parties.
  3. Detail the Interest Rate and Repayment Schedule: Specify the interest rate, keeping in mind the legal limit of 4% per month as regulated by the Ministry of Law Singapore. Outline the repayment schedule, detailing the frequency and amount of each payment. This helps prevent any misunderstandings and ensures both parties are aware of the repayment plan.
  4. Include Clauses for Late Fees and Default: Incorporate clauses that detail the penalties for late payments and the consequences of default. Specify the amount of late fees and the actions that will be taken in the event of a default, such as acceleration of the loan or legal proceedings.
  5. Ensure the Agreement is Signed and Dated by Both Parties: The loan agreement must be signed and dated by both the lender and the borrower to be legally binding. This formalizes the agreement and signifies that both parties agree to the terms outlined.

Common Clauses

  • Confidentiality Clause: A confidentiality clause ensures that the details of the loan agreement remain private and are not disclosed to unauthorized parties. This clause protects sensitive information and maintains the privacy of both parties.
  • Dispute Resolution: Include a dispute resolution clause to outline the process for handling any disagreements that may arise. This can include methods such as mediation, arbitration, or litigation. Clearly defining the dispute resolution process helps prevent prolonged conflicts and provides a clear path to resolution.

Loan Agreement Sample Template

This template is based on a sample template from the Law Depot, a legal resource based in Alberta, Canada, with offices in the United States and the United Kingdom. We proudly provide services in these countries, plus Australia, France, Germany, India, Ireland, New Zealand, Nigeria, and Singapore.


THIS LOAN AGREEMENT (the “Agreement”) is made on this [DATE] day of [MONTH], [YEAR].



of ______________________________________
(the “Lender”)



of ______________________________________
(the “Borrower”)

IN CONSIDERATION of the Lender providing a loan (the “Loan”) to the Borrower, and the Borrower agreeing to repay the Loan to the Lender, both parties agree to adhere to the terms and conditions set out in this Agreement:

1. Loan Amount & Interest

The Lender agrees to lend the Borrower $____________________, and the Borrower agrees to repay this principal amount to the Lender, with interest on the unpaid principal at the rate of ____ percent per annum, calculated yearly not in advance, beginning on [DATE] day of [MONTH], [YEAR]

2. Payment

This Loan will be repaid in full on [DATE] day of [MONTH], [YEAR]

3. Default

If the Borrower defaults in the performance of any obligation under this Agreement, the Lender may declare the principal amount owing and interest due under this Agreement at that time to be immediately due and payable.

4. Governing Law

This Agreement will be governed by and construed in accordance with the laws of the Republic of Central Singapore.

5. Costs

All costs, expenses, and expenditures, including without limitation, the complete legal costs incurred by enforcing this Agreement as a result of any default by the Borrower, will be added to the principal then outstanding and will immediately be paid by the Borrower.

6. Binding Effect

This Agreement will benefit and be binding upon the respective heirs, executors, administrators, successors, and permitted assigns of the Borrower and Lender. The Borrower waives presentment for payment, notice of non-payment, protest, and notice of protest.

7. Amendments

This Agreement may only be amended or modified by a written instrument executed by both the Borrower and the Lender.

8. Severability

The clauses and paragraphs contained in this Agreement are intended to be read and construed independently of each other. If any term, covenant, condition, or provision of this Agreement is held by a court of competent jurisdiction to be invalid, void, or unenforceable, it is the parties’ intent that such provision be reduced in scope by the court only to the extent deemed necessary by that court to render the provision reasonable and enforceable, and the remainder of the provisions of this Agreement will in no way be affected, impaired, or invalidated as a result.

9. General Provisions

Headings are inserted for the convenience of the parties only and are not to be considered when interpreting this Agreement. Words in the singular include the plural and vice versa. Words in the masculine include the feminine and vice versa.

10. Entire Agreement

This Agreement constitutes the entire agreement between the parties, and there are no further items or provisions, either oral or otherwise.

IN WITNESS WHEREOF, the parties have duly affixed their signatures under hand and seal on this [DATE] day of [MONTH], [YEAR].

this [DATE] day of [MONTH], [YEAR]

[Lender’s Name]

this [DATE] day of [MONTH], [YEAR]

[Borrower’s Name]


Good to Know

1. Why is a Loan Agreement Important?

A loan agreement is a critical document that ensures the terms of a loan are clearly defined and legally binding. Here are the key benefits of having a loan agreement:

  • Legal Proof: Clearly establishes that the money involved is a loan, avoiding tax complications.
  • Prevents Disputes: Essential when borrowing from or loaning to family or friends to prevent arguments over terms and conditions.
  • Court Protection: Provides protection for both parties if the matter goes to court, allowing the court to verify if terms are being met.
  • Clear Terms: Ensures both parties agree on the loan amount, repayment schedule, and other crucial details.
  • Enforceability: Makes the loan terms enforceable by law, providing a clear course of action if either party defaults.

2. Is a Loan Agreement Different From a Promissory Note?

A personal loan agreement is different from a promissory note which has the borrower’s one-sided personal commitment. A promissory note is also different from an IOU: an IOU is an informal document for loan agreements that has non-negotiable unspecified money repayment details.

The use of personal loan agreements is many: student loans, car loans, real estate loans, and other personal reasons or points of interest necessitating money and loans. Discover the best personal loan you can get in Singapore.

3. What are the Components of a Loan Agreement?

  • Loan Amount

This involves a breakdown of the total amount of loans, including the interest rate, total loan principal, and loan financing charges (which include processing fees, administration charges, and prepayment penalty fees). A separate section for the covenant, or the promissory note of the borrower indicating the promise to pay the loan amount, is also included in a personal loan agreement.

  • Loan Date

This includes the date on which the loan agreement was finalized and ratified by the parties involved. The date on which the loaned money was disbursed/will be disbursed is also indicated. This is used for determining the dates for payment installments.

  • Borrower and Lender Information

Includes not only the borrower’s personal information but also the personal information of the lender as well. A loan agreement usually provides the full name, age, and permanent/current residence (or address of the physical office of the lender, if applicable) of the individuals in the agreement.

  • Interest Rate

This stipulates the interest rate ratified in the loan agreement by everyone and indicates whether it comes in yearly or monthly intervals. If you are having difficulty in understanding interest rate, read our latest guide.

  • Re-Payment Terms

The repayment terms include the borrower’s repayment options and repayment schedule (monthly/yearly installments, regular/lump sum payments), as well as any prepayment agreements. The loan payment schedule also defines a “late” payment.

  • Late Fees (if any)

This refers to the added penalty fee for late payment of installments. In almost all personal loan agreements, this usually comes with an indicated interval (in days, weeks, months) and a corresponding late fee amount for each succeeding interval.

  • Default Terms (if the borrower doesn’t pay)

This discusses the default process agreement and involves a demand from the lender that compels the borrower to pay the remaining loan balance immediately. Failure to do so results in collateral assets acquisition if specified in the personal loan agreement.

  • Early Payment Penalty (if any)

Also known as the prepayment penalty fee, this is used when the borrower wants to pay all the remaining balance ahead of the end of the loan tenure. The reason for this fee is for the lender to recuperate losses on interest rates for the remaining period of the loan tenure.

  • Security (collateral)

Its use comes in a personal loan agreement during default and indicates collateral assets and properties to be acquired from the borrower and co-guarantor/s.

  • Co-Signer (if any)

This refers to other individuals who will take the responsibility for paying the loan if the primary borrower is not able to do so. These individuals are also included in the promissory note of the borrower. This adds protection to the lender by giving additional sources of payment.

  • Assigning Rights

This is the transfer of acquisition rights, which happens if the loan is transferred to another co-signer or borrower, who will assume the repayment responsibilities, or the loan responsibility is transferred from one lender to another, changing the party receiving money payments.

  • Governing Law

The governing law specifies that the agreement is subject to the laws of Singapore. This is critical for determining how the agreement will be interpreted and enforced. In Singapore, key legislation includes:

  • Moneylenders Act and Moneylenders Rules 2009: These laws regulate the operations of licensed moneylenders, including caps on interest rates and fees, ensuring fair lending practices.
  • Contracts (Rights of Third Parties) Act: Allows third parties to enforce the terms of a contract if they are expressly identified as beneficiaries.
  • Consumer Protection (Fair Trading) Act: Protects borrowers from unfair practices, ensuring transparency and fairness in loan agreements.

agent client shaking hands making deal on house loan

4. Are Digital Signatures Legally Binding?

Digital Signatures

In Singapore, digital signatures are legally recognized and accepted. According to the Infocomm Media Development Authority (IMDA), an electronic signature is “an acknowledgment provided in an electronic format that a business can use to demonstrate the intention of a party (e.g., acceptance) and that can electronically be used to authenticate the party involved.” 

This legal framework ensures that digital signatures hold the same validity as handwritten ones in business and legal transactions. An e-signature can take various forms, including:

  • Pasting a digitized image of a manuscript signature.
  • Signing with a stylus or finger on a touchscreen.
  • Ticking a checkbox.
  • Clicking ‘I accept’ on an online form.
  • Using electronic signature software.

Benefits of digital agreements

  • Eliminate the need for physical paperwork.
  • Allows parties to sign documents electronically from anywhere.
  • Reduces the risk of forgery or tampering.

Handwritten Agreements

To make a handwritten loan agreement legally binding, it must meet certain criteria. To write a hand loan agreement:

  • Clearly identify the parties involved
  • Specify the loan amount and terms
  • Detail the interest rate and repayment schedule
  • Include clauses for late fees and default
  • Ensure that the language used is clear and unambiguous to prevent misunderstandings

For a handwritten loan agreement to be legally enforceable, it must be signed and dated by both parties. The signatures should be witnessed by a neutral third party to add an extra layer of authenticity and credibility. While a written agreement is perfectly legal, it’s essential to ensure they are as detailed and clear as digital ones to avoid any potential disputes.

5. Where to Find Platforms Offering Legal Agreement Services?

While proper loan agreement templates provide a solid foundation, consulting with legal professionals is crucial. They can offer personalized advice, ensure the agreement complies with current laws, and help identify any potential issues that might not be evident in a template. Professional consultation ensures that the final document is legally robust and enforceable. 


Creating a thorough and legally binding loan agreement is crucial for protecting both parties in a loan transaction. Use our free template and guide to cover all essential details, preventing disputes and ensuring clarity. For added security, consult a legal professional to review your agreement.

Key takeaways:

  • Before signing any loan agreement, carefully review the details of the loan. Read the fine print and look out for clauses and fees.
  • A personal loan agreement differs from a promissory note with the borrower’s one-sided personal commitment.
  • The personal loan agreement is legally binding if it is notarized with a witness overseeing the signing process.

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