Guide to Drafting a Loan Agreement – When Should It Be Notarized?

A loan agreement is a written document recording the agreement between the lender and the borrower regarding the disbursement of money, repayment term, interest rate (if any), and liability in case of breach. In practice, preparing a personal loan agreement helps the parties clearly define their rights and obligations while minimizing risks in the event of disputes.

In particular, for civil transactions between individuals, using a clear and comprehensive personal loan agreement template is a necessary step to ensure legal safety.

What Is a Personal Loan Agreement?

According to the Civil Code, a property loan contract is an agreement between parties whereby the lender delivers property to the borrower, and the borrower is obligated to return the property upon maturity.

Among these, a personal loan agreement between individuals is the most common type. This is a civil transaction between two individuals, not conducted through a credit institution. The agreement may be made in writing (handwritten or typed) and has legal validity if it satisfies statutory conditions.

Is Notarization Mandatory for a Loan Agreement?

For a personal loan agreement, current law does not require notarization or certification for it to be effective, except where the loan is secured by real estate or where specialized laws require otherwise.

However, in the following cases, the parties should consider notarizing the loan agreement:

• The loan amount is substantial
• There is collateral involved
• The parties are not closely acquainted
• The parties wish to enhance evidentiary value in case of litigation

Notarization is not a mandatory condition but helps increase the level of safety for the transaction.

Required Contents in a Personal Loan Agreement

A valid loan agreement template should include the following contents:

1. Information of the Parties

Clearly state the full name, Citizen Identity Card/Identity Card number, date of issuance, place of issuance, and residential address of both borrower and lender. The more specific the information, the clearer the determination of responsibility.

2. Loan Amount

The amount must be written in both figures and words to prevent alteration.

Example:
 “Loan amount: 200,000,000 VND (In words: Two hundred million Vietnamese dong only).”

3. Loan Term

Clearly specify the start date and end date.

Example:
 “Loan term: from April 1, 2026 to October 1, 2026.”

4. Interest Rate

The parties may agree on the interest rate, provided it does not exceed 20% per year of the loan amount in accordance with the 2015 Civil Code.

It may be stated as:

• “This loan is interest-free.”

 or

• “Interest rate: 12% per year, calculated on the outstanding principal.”

5. Payment Method

Clearly specify:

• Lump-sum or installment repayment
• Cash or bank transfer
• Specific payment date

6. Commitments and Handling of Breach

It is advisable to include provisions on liability for late payment and dispute resolution methods.

Notes when drafting a personal loan agreement:

• Do not leave blank lines that could allow additional content to be inserted.
• Do not erase or modify; any amendment must be confirmed by signature.
• Prepare at least two identical copies.
• A witness may be invited if the loan amount is substantial.
• Carefully retain the original copy.

Using a clear and detailed personal loan agreement template will help minimize disputes during performance and protect the rights and interests of the parties. You may use the above loan agreement template for reference and adjust it according to the actual agreement.

If necessary, it is advisable to consult a legal expert to ensure that the agreement is clearly drafted, well-structured, and compliant with current regulations.