A loan agreement between private individuals must identify the parties and set the amount, term, schedule and interest rate in writing; above 5 000 euros, the loan is declared to the tax authorities on formulaire 2062 with the annual tax return.
What the French Civil Code says about lending money
A money loan is a loan for consumption governed by articles 1892 onwards of the Civil Code. The borrower becomes owner of the funds and must return the sum; article 1907 requires any contractual interest rate to be fixed in writing.
Agreement signed by both parties or acknowledgement of debt
Two forms are accepted: a loan agreement signed by lender and borrower, or an acknowledgement of debt signed by the debtor alone. Under article 1376 of the Civil Code, the amount must appear in figures and in words, written by the borrower personally.
Identity of the parties and purpose of the funding
The agreement states the name, date of birth and address of each party. Specifying the purpose, such as buying a car or renovation work, helps in a dispute and can show the tax authorities the true nature of the transaction.
Term, repayment schedule and first instalment date
An attached amortisation table shows each instalment, the interest share and the capital still owed. Without a schedule, the lender often has to send formal notice before demanding repayment, which complicates any recovery before the tribunal judiciaire, the civil court.
Interest rate freely set but capped
Individuals freely choose how the loan is paid for, free of charge or not, as long as they stay below the usury rate published every quarter by the Banque de France. A usurious rate exposes the lender to criminal penalties.
Early repayment and default clauses
Provide for the right to repay early without penalty, as well as the consequences of a delay: a grace period, moderate late interest, and the balance falling due after unanswered formal notice. These clauses prevent a family or friendly quarrel at the first hitch.
Tax declaration on formulaire 2062
According to the Ministry of the Economy, a loan above 5 000 euros in a calendar year is declared on formulaire 2062, online with the annex returns or on paper. Interest received is taxable; our page on private loan taxation details these obligations.
Giving the deed a certain date or enforceability
Registering the deed with the tax office gives it a certain date. A deed drawn up by a notary goes further, being directly enforceable without a court ruling. Costs and benefits are compared on our page about a private loan signed before a notary.
Possible guarantees: surety, pledge or mortgage
The lender may ask for a third-party surety signed with the wording required by the Civil Code, a pledge over movable property, or a mortgage, which requires a notarial deed. The heavier the guarantee, the more prior legal advice is recommended.
Traceable transfer and proof of payment
The agreement alone does not prove the money was handed over. Pay the funds by bank transfer quoting the loan reference and keep the statement. A large cash handover is hard to prove and may alert the bank under anti-money-laundering rules.
Limitation period and recovery of unpaid sums
A claim for payment of a debt between individuals is generally time-barred after five years under article 2224 of the Civil Code, running from each missed instalment. After formal notice by registered letter, an order for payment can be sought from the court.
Fake contracts sent by bogus lenders
Scammers send contracts covered in stamps, bank logos and fake notary signatures, then demand fees. Any such document should be checked using the method set out in our guide to verifying a private loan contract before paying anything at all.
Setting up the agreement step by step
- Agree together on the amount, term, any interest rate and the intended use of the funds before drafting.
- Draft the agreement or acknowledgement of debt with the amount written in figures and words by the borrower.
- Attach a dated amortisation table and sign two original copies, one for each party.
- Pay the funds by bank transfer quoting the agreement reference and keep the account statement.
- Declare the loan on formulaire 2062 if it exceeds 5 000 euros in the calendar year.
- Track each instalment received in a shared table and report interest earned as investment income.
Costs of formalising the loan
| Element | Rule | Indicative cost |
|---|---|---|
| Private agreement (acte sous seing privé) | Drafted by the parties, valid if it includes the required terms | Free |
| Registration with the tax office | Optional, gives a certain date | Fixed duty, check with the SIE |
| Notarial deed | Enforceable, compulsory for a mortgage | Regulated fees, indicative depending on amount |
| Interest rate | Free, below the quarterly usury rate | Set by the parties |
| Interest received by the lender | Taxable as investment income | Under the tax regime in force |
Documents to gather before signing the agreement
- Copies of the lender's and borrower's identity documents
- Loan agreement or acknowledgement of debt in two copies
- Signed and dated amortisation table
- Bank details (RIB) of both parties for the payout and repayments
- Formulaire 2062 for a loan above 5 000 euros
- Proof of the initial transfer of funds
- Surety deed if a guarantor is involved
Common mistakes in an agreement between individuals
- Leaving out the written interest rate: interest agreed orally becomes disputable and the lender risks receiving only the legal rate.
- Typing the amount on a computer with no mention written by the debtor personally, which weakens the evidence.
- Handing over a large sum in cash without a signed receipt, making the loan almost impossible to prove in court.
- Signing a contract sent by a stranger met online who then demands notary or insurance fees.
- Failing to declare a loan of more than 5 000 euros, when the tax office can reclassify the operation as a gift.
Questions about credit agreements between individuals
Does a loan agreement between individuals have to go through a notary?
No, a private deed is enough in most cases. A notary becomes essential for a mortgage and useful if the lender wants an enforceable title. Beware: a real notary never asks for an advance transfer by message to release a loan.
Who has to fill in formulaire 2062?
The Ministry of the Economy states that either the lender or the borrower may file the declaration, at the same time as the income tax return. To be safe, each party can check that it has been done and keep a copy with the agreement.
Can you lend to a relative without interest?
Yes, an interest-free loan is perfectly lawful. The agreement should then state that no interest is due. A realistic schedule still matters, because a loan that is never repaid may be treated by the tax authorities as a disguised gift subject to transfer duties.
What can a lender do if the borrower stops repaying?
Start with a written reminder, then formal notice by registered letter with acknowledgement of receipt. Without a reply, the order for payment procedure before the tribunal judiciaire yields an enforceable title, which is then handed to a commissaire de justice (bailiff).
Is a loan agreement template found online enough?
A template is a useful basis provided you adapt it: amount in words, precise schedule, written rate, late payment clauses. For a large sum or a guarantee, review by a lawyer or notary limits the risk of the agreement being declared void.