Payment Plan Agreement Template

A payment plan agreement is a legal document outlining how a borrower agrees to pay back a lender over time. Payments are commonly made on a weekly or monthly basis until the debt is paid.

Payment Plan Agreement Template

A payment plan agreement is a legal document outlining how a borrower agrees to pay back a lender over time. Payments are commonly made on a weekly or monthly basis until the debt is paid.

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A payment plan agreement is a legal document outlining how a borrower agrees to pay back a lender over time. Payments are commonly made on a weekly or monthly basis until the debt is paid.

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What to Include (7)

• Date: The date the agreement is being completed should be clearly listed at the top of the document.
• Parties Involved: The names and addresses of the lender and borrower.
• Amount: The balance ($) the lender owes to the creditor. Interest rate, down payments, and payment instructions should also be included.
• Reason for Loan: Why the lender owes money to the creditor.
• Repayment Schedule: How the lender will go about paying off the balance (e.g., monthly payments).
• Default Terms: What happens in the event the lender stops making payments towards the balance.
• Execution: The agreement must be signed by the creditor and lender in order to be legally binding.

Optional Terms (4)

To create a more robust and effective agreement, the following conditions can be added to the agreement:

1. Discounted Balance: A condition that allows the creditor to reduce the total balance the lender is required to pay.
2. Late Payment Penalties: Establishes the consequences or fees should the lender miss or underpay on a payment.
3. Prepayment Penalty: Used for regulating (or outright denying) the lender’s option to pay the balance early.
4. Co-Signer (guarantor) : The creditor can require high-risk lenders to have a co-signer on the agreement.

Sample

PAYMENT PLAN AGREEMENT

1. THE PARTIES. This Payment Plan Agreement (“Agreement”) is entered into on [DATE] , by and between:

Borrower: [BORROWER’S NAME] with a mailing address of [BORROWER’S ADDRESS] (“Borrower”), and

Lender: [LENDER’S NAME] with a mailing address of [LENDER’S ADDRESS] (“Lender”).

2. AMOUNT BORROWED. It is acknowledged that the Lender has given a loan to the Borrower in the amount of $ [AMOUNT] at an annual interest rate of [#] % for the purpose of: [REASON FOR LOAN]

3. PAYMENT SCHEDULE. Borrower agrees to make payments equal to $ [AMOUNT] towards the total debt to be made: (check one)

☐ – Weekly. Payments are to be made every [WEEKDAY] .
☐ – Monthly. Payments are to be made every [DAY OF THE MONTH] .
☐ – Other. [DESCRIBE]

Payments shall be due in accordance with the payment scheduled herein until the amount borrowed is paid.

4. LATE PAYMENTS. Payments not made within [#] day(s) after the due date may incur a late fee of: [DESCRIBE LATE FEE]

5. PRE-PAYMENT. Regarding pre-payment, the Borrower is: (check one)

☐ – Allowed to Pre-pay. Borrower can pre-pay the amount borrowed, in-full, at any time and without penalty.

☐ – Not Allowed to Pre-pray. Borrower cannot pre-pay the amount borrowed without a penalty of: [DESCRIBE PRE-PAYMENT PENALTY]

6. DEFAULT. Failure to make payments as agreed will result in a default, allowing Lender to take legal action to recover the debt. This Agreement shall be governed under the laws in the State of [STATE] .

Borrower’s Signature: _______________________ Date: __________
Print Name: _______________________

Lender’s Signature: _______________________ Date: __________
Print Name: _______________________