How to Write a Personal Loan Agreement in Singapore?

In Singapore, if you’re handing over cash, don’t take chances; ink it up! The debt management arena is swamped with paperwork, but let’s zero in on the two most popular: IOUs and Loan Agreements.

Normally, the creditor, be it a bank or licensed money lender, will furnish the loan agreement. But if it’s a more intimate transaction between pals or kin, why not tailor-make your own loan agreement? That’s where IOUs come into the picture.

Grasping the Ins and Outs of Loan Agreements and IOUs

When it comes to lending and borrowing, loan agreements are the way to go. These written documents bind the debtor to pay back the creditor a specific sum within a specified period. 

A comprehensive loan agreement should include pertinent details such as the date of payment, total payment sum, installment particulars, payment mode, and how the debt was incurred. Banks and licensed moneylenders usually provide loan agreements for their clients.

For loans between loved ones or close friends, it’s possible to create a custom loan agreement. Enter IOUs: simple documents that outline the borrower’s recognition of the debt. Although not legally binding, IOUs are informal written agreements that can record the parties’ initial agreement on the loan before they proceed with a more formal document.

Can anyone draft a Personal Loan Agreement in Singapore?

Drafting a Personal Loan Agreement in Singapore can be a daunting task, especially when borrowing from acquaintances or loved ones. While licensed lending institutions are the preferred option due to their expertise, there are alternative methods to create a strong agreement independently, such as IOUs.

Do IOUs carry any legal weight?

In Singapore, IOUs can be deemed legally enforceable in certain circumstances. For instance, if the sum borrowed is substantial or there’s a high probability of the borrower defaulting, it’s prudent to seek the services of a lawyer to draw up a comprehensive loan agreement that safeguards your interests.

That being said, for small amounts and trustworthy borrowers, an IOU may suffice. This straightforward document can be quickly drafted and acts as a prompt for the borrower to settle their outstanding debt with the lender.

Do you have to obtain a license to lend money?

It’s vital to note that while the Moneylenders Act prohibits unlicensed moneylending businesses, it doesn’t entirely outlaw lending money. If you lend money occasionally to friends and family, it doesn’t fall under the jurisdiction of moneylending. However, if it’s a habitual practice or you lend money to several people, it may necessitate a license.

How do you write an IOU contract?

In Singapore, an IOU agreement is a handy solution for casual transactions within the family circle. It serves as clear-cut evidence of the loan agreement. To make an IOU legally binding, it should contain key details such as:

Besides, having a written IOU can be advantageous, particularly when a significant amount of money is in play. Luckily, a handy IOU template is available on Singapore Legal Advice that you can use for your convenience.

Key Elements of an IOU Contract

  • Lender’s Information: Comprise the complete name, identification number, email address, and communication information of the creditor.
  • Borrower’s Information: In like manner, furnish the complete name, identification number, email address, and contact details of the borrower.
  • Loan Amount: Clearly state the total amount of the loan being provided.
  • Loan Disbursement Method: Specify the mode of disbursing the loan, whether it be in the form of cash or a check.
  • Payment Method: Indicate the favored medium of payment, for instance, cash, bank transfer, or check.
  • Payment Schedule: Specify the repayment plan, encompassing the periodicity and sum of each installment.
  • Interest Rate (if any): Incorporate the prearranged percentage rate for the loan.
  • Collateral and Guarantors (if any): For larger loans, lenders seek assurance to reduce the risk of default. One way to achieve this is by requesting collateral or guarantors.
  • Signatures and Witnesses: The personal loan contract should provide ample room for the involved parties, as well as witnesses, if necessary, to affix their signatures and indicate the date of the agreement. 


When it comes to safeguarding the interests of both the borrower and lender, putting pen to paper is paramount in Singapore. This holds true regardless of whether the loan is secured from a licensed money lender or birthed from a private agreement between amicable acquaintances. 

Small sums may warrant the use of informal IOUs or serve as stepping stones to the eventual creation of a comprehensive loan agreement. For heftier loans, it’s not uncommon for collateral or guarantors to be demanded, while the signatures of all involved parties must be sought. 

It’s worth noting that while lending money to kin and kith is legally permissible in Singapore, consistent practices of this nature may require obtaining a license.

The Smart Choice for Your Financial Future – Accredit Moneylender

In the realm of lending and borrowing money in Singapore, crafting a tailored loan agreement can be intimidating. The stakes are high – you need to safeguard your financial interests without jeopardizing your relationships.

This is where Accredit, a licensed moneylender, comes into play. We provide personal loans with attractive terms and competitive interest rates that are in line with your financial goals.

Take the first step towards securing your financial future by reaching out to us today.

Awarded by Ministry of Law to operate a new Pilot Programme, we have been providing transparent and quality service since 2002.


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