As of 13 August 2026, AI can draft a loan agreement between friends.

What to actually do

1. Hand it to a person

   The route this page recommends

   Someone with a licence or accountable authority has to sign this before it counts.

2. Use a tool built for this

   Second choice

3. Do it yourself

   The distant third

   A chat interface, chat-fluent skill, and roughly 30 minutes until you can act on the result.

   How to actually do it

   1. Agree the basic deal with your friend, including the loan amount, payment date, repayment method, interest, missed-payment arrangements, early repayment and whether there is any security or guarantor.
   2. Identify the correct UK jurisdiction, then gather both parties' full legal names and addresses and the payment details that need to appear in the agreement.
   3. Open a chatbot and paste the copyable prompt, replacing each bracketed slot with the agreed facts and leaving unknown items clearly marked as unknown.
   4. Ask the chatbot to produce the missing-decisions list before you treat the draft as complete, and resolve those questions with your friend rather than letting the model fill them in.
   5. Compare every name, amount, date, instalment, interest term and default consequence in the draft against your written agreement and amend the document where they differ.
   6. Send the completed draft to a UK solicitor for review if the sum is substantial, the arrangement is unusual, security or a guarantee is involved, or either party is unsure about the legal effect.
   7. After both parties agree the final wording, sign the same version and retain the signed document and evidence of the loan payment.

   Prompt

   Draft a plain-English loan agreement for a private loan between friends in the UK.
   
   Use only the facts and terms supplied below. Do not invent missing details, legal authorities or clauses that depend on facts I have not provided. If an important term is missing, list it as a question before the draft. State clearly that this is a drafting aid and not professional advice.
   
   Jurisdiction within the UK: [England and Wales / Scotland / Northern Ireland]
   Lender's full legal name and address: [details]
   Borrower's full legal name and address: [details]
   Loan amount and currency: [details]
   Date the money will be paid: [date]
   Purpose of the loan, if relevant: [details]
   Interest: [none / rate and how it is calculated]
   Repayment structure: [single repayment or instalments, amounts and dates]
   Payment method and account details to be recorded, if needed: [details]
   Early repayment: [terms]
   What happens after a missed payment: [agreed terms]
   Security or guarantor: [none / details]
   Any agreed costs or consequences of default: [details]
   Notice method and addresses: [details]
   Any other agreed terms: [details]
   
   Produce:
   - a short list of missing decisions or ambiguities;
   - the draft agreement with numbered clauses;
   - a payment schedule if instalments apply;
   - signature blocks for both parties and an optional witness section, without claiming that witnessing is legally required;
   - a final checklist of factual points to compare with our agreement.
   
   Keep the language neutral and avoid implying that a clause is enforceable merely because it appears in the document. Flag any issue that should be checked by a UK solicitor, especially interest, security, guarantees, tax, disputes, consumer-credit implications or a large loan.

   Open it prefilled in ChatGPT or Claude, or copy it into Gemini, which takes no prefill link.