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A Letter of Loan Agreement Between Friends serves as a formal documentation of money lending between individuals who share a personal relationship. This document type is particularly important in Germany, where even friendly loans should be properly documented to ensure legal clarity and protection under the German Civil Code (BGB). The agreement helps prevent future misunderstandings by clearly stating the loan amount, repayment terms, any interest charges, and consequences of default. While maintaining a friendly tone, it provides legal security for both lender and borrower. This document is commonly used when personal loans exceed nominal amounts or when parties want to ensure clear documentation of their arrangement, regardless of their friendship. It's especially relevant in situations where tax authorities or estate administrators might need to verify the existence and terms of personal loans.

1. Date and Parties: Full names and addresses of both the lender and borrower

2. Opening Statement: Clear statement that this is a loan agreement letter between the named parties

3. Loan Details: Specific amount being loaned, currency, and date of disbursement

4. Repayment Terms: Payment schedule, amounts, and method of payment

5. Interest Rate: Statement of interest rate (if any) and calculation method

6. Duration: Term of the loan and final repayment date

7. Default Provisions: Consequences of missed payments or default

8. Signatures: Space for both parties to sign and date the agreement