Friend loans fail differently
A loan between friends is a simple contract: offer, acceptance, and consideration — and the money itself is the consideration. It binds without a solicitor, a deed, or a witness. What friend loans lack isn’t validity; it’s evidence. Family loans come with a family to remember them; a friend loan has two people, one bank transfer, and whatever was said in the pub.
Let the agreement do the chasing
The quiet gift of a written schedule is that nobody has to bring it up. The date does the asking; the standing order does the paying; the friendship stays out of it. And if it ever truly stalls, a signed agreement plus the bank record is what Money Claim Online is built for — claims up to £10,000 go to the small claims track, designed for people without solicitors.
Example: £4,000 between flatmates
Josh’s car dies the week he starts a new job across town. His flatmate Sam lends him £4,000 for a replacement — £180 a month for two years, in writing, signed on both phones over dinner. The standing order starts the next payday. Nobody ever mentions it again, which is precisely the point.
The four-minute agreement is not a statement of distrust. It’s the thing that makes sure money never has to become a conversation.
What the agreement should pin down
- The amount and the date the money moves — with a payment reference on the bank transfer so the advance is provable.
- The repayment plan — instalments or a single date, and what happens if a payment is missed.
- Interest, if any. There’s no statutory cap between family members; the builder warns (never blocks) at 25%+. Remember interest you receive is taxable income.
- Loan, not gift — stated in terms. It protects the borrower’s siblings, the lender’s estate planning, and everyone’s memory.
- Signatures from both sides — electronic signing is valid in England and Wales, and it’s how LendRight finishes the job.
If repayment stalls
Money claims start online wherever you live — through Money Claim Online or the County Court Money Claims Centre — and claims up to £10,000 usually go to the small claims track, built for people without solicitors. If an in-person hearing is ever needed, it’s listed at a county court hearing centre convenient to the defendant, wherever in England and Wales they live. In practice, a signed agreement plus a bank record is usually enough to make the conversation end long before a courtroom.
Under the Limitation Act 1980 you generally have six years from a missed due date to bring a claim on a simple contract — one more reason the agreement should set real dates.
Scotland and Northern Ireland — a different story
If either of you lives in Scotland or Northern Ireland, the builder will tell you honestly that we can’t serve you yet — those are separate legal systems, and a template written for England and Wales isn’t automatically right there. Everything about that decision is on our coverage page.
Put it in writing — kindly.
Draft free in about 4 minutes. Pay the one-time £24.99 only when you send it for signing.
Create my loan agreement