A personal loan between individuals is money lent with no required purpose, governed in France by Articles 1892 onwards of the Civil Code; it must be proven in writing above 1,500 euros and declared for tax above 5,000 euros.
What a personal loan between two individuals is
Unlike credit tied to a car or renovation work, a personal loan leaves the borrower free to use the money. Between individuals, it legally takes the form of a loan for consumption: the borrower owns the funds and must return the same sum.
The Civil Code rather than the Consumer Code
The fourteen-day withdrawal period, the prior offer and the standardised information sheet apply to professional lenders. An individual lending occasionally is not bound by them, which makes a written agreement all the more important to protect the borrower.
Written proof from 1,500 euros
Article 1359 of the Civil Code requires a written document to prove any transaction above 1,500 euros. The IOU under Article 1376 bears the borrower's signature and the sum in figures and words, written by the borrower personally.
Interest: in writing and within a legal cap
Loans between individuals are often interest-free. If interest is charged, Article 1907 requires a rate set in writing, which cannot exceed the quarterly Banque de France usury rate. A template is available on our loan agreement page.
Tax rules for lender and borrower
The borrower, or failing that the lender, declares the agreement on form 2062 (French loan declaration) if the amount exceeds 5,000 euros, for the year it was signed. The lender adds interest received to their tax return, under the flat-rate levy or progressive scale.
The banking monopoly and regular lenders
Lending habitually for interest falls within the monopoly of credit institutions under the Monetary and Financial Code. Someone who keeps granting personal loans to strangers through adverts risks criminal prosecution and deserves no trust at all.
Platforms: what really exists
The European crowdfunding framework mainly covers loans to businesses through providers authorised by the AMF. Websites presenting themselves as unlicensed personal loan platforms between individuals need checking; see our review of loan websites.
Personal loan adverts on social media
Facebook, TikTok or Instagram profiles offer personal loans of 1,000 to 50,000 euros within twenty-four hours. The testimonials are fabricated and the sequel never changes: fees, then silence, as described in the social media loan scam.
Early repayment and deferred instalments
The agreement can allow early repayment without penalty and provide for deferring an instalment in case of unemployment or illness. Under Article 1899 of the Civil Code, the lender cannot demand the money back before the agreed term.
What to do if the borrower does not repay
The lender first sends a formal notice by registered letter, then can try free conciliation with a court conciliator. Failing that, an order for payment from the civil court, backed by the IOU, provides an enforceable title.
The limitation period to watch
A claim for repayment of a private loan is in principle time-barred after five years under Article 2224 of the Civil Code, counted from each missed instalment. A partial payment or a new written acknowledgement interrupts this period.
Independent advice before signing
Consumer associations, Maisons de justice et du droit (local legal advice centres) and free lawyer consultations at town halls can review a draft agreement. This site grants no credit and recommends checking every point with a legal professional.
Setting up a personal loan safely
- Agree together on the amount, term and a schedule that fits the borrower's monthly budget.
- Choose between an interest-free loan and a written rate, checking the quarterly usury rate published by the Banque de France.
- Draft and sign in two copies an IOU stating the sum in figures and words.
- Transfer the funds by bank transfer, never in cash, so there is dated proof of payment.
- Complete form 2062 when the loan exceeds 5,000 euros and attach it to the income tax return.
- Set up a standing order for repayments and keep a table of the sums already paid.
What a personal loan between individuals costs
| Item | Level | Observation |
|---|---|---|
| Agreed interest rate | 0 % or a freely set written rate | Must not exceed the usury rate |
| Drafting the IOU | Free as a private document | Notarial deed possible, paid, indicative |
| Tax on interest | Flat-rate levy or progressive scale | Check the current rate every year |
| Order for payment if unpaid | Modest court registry fees | Indicative, plus judicial officer costs |
| Advance demanded by a fake lender | Several hundred euros, sometimes more | Indicative, money lost to the scam |
Documents for a well-structured personal loan
- ID cards of both parties
- Signed IOU or loan agreement
- Repayment schedule
- Bank details of lender and borrower
- Transfer notice for the funds
- Form 2062 above 5,000 euros
Common faults with a private personal loan
- Lending cash with nothing in writing, which then makes it impossible to prove a debt above 1,500 euros before the civil court.
- Setting an interest rate orally or above the usury rate, exposing the lender to the interest clause being void and to penalties.
- Answering a quick-loan advert on social media and paying insurance or registration fees demanded before payout.
- Sending a stranger a copy of your ID and bank details, which can be reused to open accounts or take out fraudulent credit.
- Letting more than five years pass without chasing a defaulting borrower, as the limitation period may then bar any legal action.
Everyday questions about private personal loans
Is a simple IOU enough?
Yes, for an ordinary personal loan. It must be signed by the borrower and state the sum in figures and words. Adding the schedule, any rate and early repayment terms prevents most later disputes.
Does an interest-free loan have to be declared?
Yes, the duty to declare on form 2062 depends on the amount, not on interest. Any loan above 5,000 euros is covered, including between members of the same family. Failing to declare can lead to a tax fine.
Does the borrower get a cooling-off period?
No, the Consumer Code's fourteen-day period applies only to credit granted by professionals. Between individuals, the parties can nevertheless agree on a reflection period or a right to cancel in the contract.
How can I check that a lender found online is reliable?
An individual who regularly lends to strangers is acting illegally. Check whether the organisation appears in the REGAFI register or on the AMF list of authorised providers, and refuse anyone who asks for payment before releasing funds.