Private Loan Agreement
The private loan agreement, or loan acknowledgment, formalizes the handing over of a sum of money by a lender to a borrower who undertakes to repay it. Producing a written document is essential as soon as the sum exceeds 1,500 euros: it constitutes proof of the loan, prevents it from being reclassified as a gift, and clearly sets the repayment schedule and any interest. Above 5,000 euros, the loan must be declared to the tax authorities. This form is in English, but the document is generated in French, ready to sign and use in France.
Note: the questionnaire is in English; the generated document is in French.
The lender
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Frequently asked questions
Must a private loan be in writing?
As soon as the sum lent exceeds 1,500 euros, a written document is required to prove the loan (article 1359 of the Code civil). Below that, a written document remains strongly advised. Without a document, the lender risks being unable to claim repayment.
Must the loan be declared to the tax authorities?
Yes, any loan exceeding 5,000 euros must be declared to the tax authorities via form 2062, attached to the income tax return for the year of the loan. This declaration is in principle the responsibility of the borrower.
Can interest be provided for?
Yes. The parties may agree on an interest rate, which must be in writing and must not exceed the usury rate set by the Banque de France. Without a mention of interest, the loan is deemed to be interest-free.
What happens if the borrower does not repay?
The agreement serves as evidence to pursue amicable and then judicial recovery. An acceleration clause allows the full balance to be demanded in the event of an unpaid installment. The lender has a five-year period to act from the date of default.
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