Seven things to include in an IOU

Seven things to include in an IOU

Considering lending or borrowing money with someone you love?

When borrowing or lending money from family or friends, setting up a personal loan agreement might seem like an unnecessary step.

However, there are many benefits that come with putting in place a more formal IOU. 

Taking time to determine a detailed agreement could help to protect you, your relationship and your finances in the short and long term. 

So, what should be included in a personal loan agreement?

Here’s a list of seven things you’ll want to include in an IOU with someone you care about.

1.) Legal names of both parties

Nicknames can be fun, but it’s better to keep things by the book when it comes to mixing money and relationships. 

2.) Contact information

Consider including phone numbers and email addresses of both parties.

3.) The reason for the loan

Context and clear communication go a long way!

4.) Total loan amount

Clearly state the total amount of the loan or debt in both numeric and written formats so there’s no room for misunderstanding.

5.) Repayment terms

You’ll want to continue the theme of overcommunication on this part by listing out the terms of repayment, including the schedule of payments, each payment due date and the final payment due date. 

6.) Dates

Include the date when the loan was issued and the expected dates of repayment.

7.) Signatures

Both parties should sign and date the IOU or loan agreement to signify their acceptance of the terms.

It’s important to take the transaction seriously by formalizing it with a written (or typed) agreement. 

Taking the time to clarify the terms of the loan, protecting the relationship and establishing a sense of responsibility can help you proactively avoid miscommunication and misunderstandings down the road. 

If you’re currently jotting down your IOU on a piece of paper or into a Word doc, we’re here for you!

With Zirtue, you can ditch the paper napkin and completely digitize your personal loan experience with all the items listed above already baked into the process. 

Emily Cox
April 14, 2023
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