Loan Agreement - Personal - Alabama

UNSECURED PERSONAL LOAN AGREEMENT — ALABAMA

This form is for a fixed-principal, unsecured loan to an individual. It does
not create a mortgage, security interest, guaranty, revolving line, payday or
title loan, credit sale, litigation-funding arrangement, business-purpose loan,
or lender-compliance package.

1. Transaction Gate — Complete Before Signing

A. Parties and purpose

B. Lender-status gate

Ala. Code § 5-19-1(3) defines a Mini-Code “creditor” through regular extension or arrangement of finance-charge credit and transaction-count thresholds. This agreement does not decide federal creditor status, licensing, or another regulated-lender classification.

If Lender is a regulated creditor, regularly makes loans, solicited the loan commercially, charges origination or incident fees, takes residential security, or uses this form repeatedly, do not rely on this standalone agreement. Attach every required disclosure and use the correct licensed-lender documents.

C. Interest track

Select one track only after counsel verifies every charge that may count as interest or finance charge:

• ☐ No-interest loan. Principal bears zero interest.

• ☐ Written-rate loan below $2,000. Original principal is less than $2,000; the fixed annual simple-interest rate is [____]%, not exceeding the written-contract ceiling stated in Ala. Code § 8-8-1. No origination, documentation, service, commitment, broker, or other incident charge is imposed.

• ☐ Loan of at least $2,000. Original principal is $[________], not less than $2,000. The fixed annual simple-interest rate is [____]%. Counsel has reviewed Ala. Code § 8-8-5, including its consumer-unconscionability rule and its treatment of all direct and indirect incident charges as interest.

• ☐ Regulated-creditor transaction. Do not use the rate clause below until the Mini-Code, federal, licensing, disclosure, and finance-charge schedule is attached and approved: [IDENTIFY ADDENDUM].

All direct or indirect charges incident to the loan: [NONE / ITEMIZE AND INCLUDE IN COUNSEL'S RATE ANALYSIS]

Do not use “maximum lawful rate,” automatic reduction, or principal-credit boilerplate as a substitute for calculating a lawful rate before signing. Ala. Code § 8-8-12 states the ordinary consequence of a usurious contract; it does not validate an excessive charge.

2. Agreement and Funding

This Personal Loan Agreement is made on [__/__/____] between [LENDER] (“Lender”) and [BORROWER] (“Borrower”).

Lender agrees to lend Borrower $[PRINCIPAL]. Lender shall fund the loan on [__/__/____] by [CHECK / TRANSFER / OTHER TRACEABLE METHOD] to [RECIPIENT / ACCOUNT]. Borrower shall sign a receipt or the parties shall retain other proof of funding.

Funding condition: [NONE / IDENTIFY COMPLETED DISCLOSURE, IDENTITY, AUTHORITY, OR OTHER CONDITION]

No amount is owed under this agreement unless and until Lender actually provides the stated principal, except for a separately identified lawful and earned charge approved by counsel.

3. Interest and Payment Terms

A. Interest

Select the clause matching Section 1.C:

• ☐ Principal bears no interest.

• ☐ Unpaid principal bears simple interest at a fixed annual rate of [____]%. Interest begins on [__/__/____], is calculated on [ACTUAL/365 / OTHER REVIEWED BASIS], is not compounded, and stops accruing on principal when that principal is paid.

No late charge, default-rate increase, origination fee, prepayment fee, collection fee, or other charge applies unless a separately reviewed addendum identifies the amount, trigger, calculation, and current authority.

B. Payment schedule

Attach the complete amortization schedule if the loan has more rows than shown.

C. Payment method and application

Payments shall be made to [PAYEE] at [ADDRESS / APPROVED METHOD]. Lender shall provide a receipt or account record showing the date received and application.

Unless a required law or approved disclosure provides otherwise, a payment is applied in this agreed order:

1. currently due accrued simple interest;
2. currently due principal; and
3. any remaining amount to principal.

Borrower may prepay all or part of the unpaid principal at any time without a prepayment penalty. A partial prepayment does not postpone a scheduled payment unless Lender agrees in a signed writing.

4. Borrower Statements

Borrower states as of signing that:

1. Borrower's legal name and contact information above are accurate;
2. Borrower is signing voluntarily and has had an opportunity to obtain independent legal and financial advice;
3. the stated loan purpose and information supplied for the transaction are materially accurate;
4. Borrower has received or will receive a copy of the signed agreement and every attached schedule or disclosure; and
5. Borrower has not been asked to waive bankruptcy protection, exemptions, due process, notices required by law, or defenses that cannot lawfully be waived.

These statements do not promise solvency, future income, litigation-free status, or ability to pay regardless of changed circumstances.

5. Lender Statements

Lender states as of signing that:

1. Lender has authority to provide the principal from lawful funds;
2. the interest rate, every incident charge, and the payment schedule were reviewed under the transaction track selected in Section 1;
3. Lender has identified and delivered all disclosures and documents required for the actual lender and transaction; and
4. Lender will maintain an accurate ledger of funding, payments, credits, interest, and balance.

This agreement does not represent that Lender is exempt from a license, the Alabama Mini-Code, federal consumer-credit law, fair-lending law, military protections, bankruptcy law, debt-collection law, reporting law, privacy law, or another applicable requirement.

6. Default and Response

A. Payment default

A payment default occurs if Borrower fails to pay a scheduled amount by its due date and the failure continues after the following contract notice period: [____] days after Borrower receives a written notice accurately stating the missed payment, current balance, payment method, and response date.

The parties acknowledge that a statute, regulation, bankruptcy case, servicing rule, military protection, court order, or other controlling requirement may require a different notice or limit a remedy. The longer or more protective controlling rule applies when it cannot lawfully be varied.

B. Other material breach

A material nonpayment breach occurs only if a party materially violates an express duty in this agreement and fails to cure, when cure is possible, within [____] days after receiving written notice that describes the breach and requested cure.

Bankruptcy, insolvency, a decline in financial condition, additional debt, sale of ordinary personal property, or a dispute over the loan is not made an automatic contractual default by this form.

C. Lender response

After an uncured payment default, Lender may give a written acceleration notice declaring the accurately calculated unpaid principal and accrued lawful interest due, but only if acceleration is permitted after counsel reviews the loan, notices, defenses, bankruptcy status, and current law.

Lender shall not collect an unearned charge, compound interest unless specifically lawful and agreed, seize property without a valid security right and required process, report inaccurate information, contact represented or protected persons unlawfully, or threaten a remedy that is unavailable or not intended.

No automatic attorney fees, collection percentage, injunctive relief, confession of judgment, wage assignment, bank-account authorization, indemnity, liability cap, cross-default, force-majeure payment excuse, arbitration clause, or jury waiver is included.

7. Communications, Records, and Notices

Each party shall promptly update the other party's notice address. Contract notices must be in writing and delivered by:

• ☐ personal delivery with dated receipt;

• ☐ trackable mail or courier;

• ☐ agreed electronic delivery to [ADDRESS], with the following evidence of receipt: [________________________________]; or

• ☐ other reviewed method: [________________________________].

Notice is effective on actual receipt unless a controlling rule requires another result. Ordinary payment reminders do not amend this agreement.

Lender shall provide a balance statement on reasonable written request showing principal funded, payments, credits, interest, charges, and the calculation date.

8. Changes, Transfer, and Payoff

An amendment, payment deferral, rate change, maturity extension, settlement, or waiver must be in a signed writing that identifies the affected term. A one-time acceptance of a late or partial payment does not change future due dates unless the signed writing says it does.

Neither party may transfer this agreement in a way that changes Borrower's payment amount, defenses, or required notices. Any permitted transferee takes subject to applicable law and the documented account history.

On full payment, Lender shall provide a dated written payoff confirmation and update any authorized account record. If a lien or security interest was separately created, its release must be handled under the separate secured-loan documents and current law; this unsecured form creates none.

9. General Terms

Alabama law governs this agreement except to the extent controlling federal law or another nonwaivable rule applies. This sentence does not select venue, create federal jurisdiction, or waive a jury.

This agreement, its payment schedule, and listed addenda state the parties' loan terms. If one term is unenforceable, a court may address that term without the parties agreeing in advance to rewrite a statutory protection.

Attached documents:

• ☐ Payment / amortization schedule

• ☐ Required consumer-credit disclosures: [________________________________]

• ☐ Lender-license or compliance record: [________________________________]

• ☐ Other: [________________________________]

The parties may use counterparts and the signing method identified below after counsel confirms that the selected process reliably identifies each signer and preserves the complete signed record.

10. Signatures

Funding receipt

Borrower acknowledges receipt of $[PRINCIPAL] by [METHOD] on [__/__/____].

Borrower signature: ______________________________

11. Final Review Checklist

• ☐ Natural-person borrower and personal-loan purpose confirmed

• ☐ Lender and creditor status classified

• ☐ Licensing and federal / state disclosure review completed

• ☐ Loan is unsecured; no collateral or guaranty language is implied

• ☐ Principal is actually funded and documented

• ☐ Correct § 8-8-1 or § 8-8-5 track selected

• ☐ Every direct and indirect incident charge included in rate review

• ☐ Payment and interest math independently checked

• ☐ No automatic usury “savings” cure or excessive charge

• ☐ No unverified late fee, default rate, collection percentage, or attorney fee

• ☐ Default and acceleration notices reviewed for the actual transaction

• ☐ Bankruptcy, military, fair-lending, reporting, collection, and privacy issues checked

• ☐ Complete signed copy and all addenda delivered to each party

• ☐ Qualified Alabama counsel approved the completed agreement

Official Sources

• Ala. Code § 5-19-1
• Ala. Code § 8-8-1
• Ala. Code § 8-8-5
• Ala. Code § 8-8-12

Amendment screen: Citation-index results for §§ 8-8-1, 8-8-5, 8-8-12, and 5-19-1 produced no relevant recent enacted amendment. The 2026 results for the shorter numeric strings were loose matches to unrelated bills. The Legislature's current Code records retain the quoted text and histories.