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Free IOU Template

Create a simple IOU form with our template to make your informal loan agreement. Ensure all the details are in place when you create your form.

Last Update January 25th, 2023


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What Is an IOU

An IOU is an informal loan agreement between a lender and a borrower. It puts the debt in writing, and the person who borrows your money has a responsibility to pay it back. 

An IOU is sometimes referred to as: 

  • Debt Acknowledgement Form

  • I Owe You 

Many times this document is used between 2 people with a previous relationship. Even though it is not considered formal, the agreement can be enforceable and used in court.

An I Owe You states the amount of money borrowed and when it needs to be paid back by the borrower. 

When to Use an IOU Template

Using a simple IOU form to complete every type of agreement is not recommendable. It is a much more informal type of loan agreement and shouldn’t be used for formal transactions.

However, an IOU is the best option in certain moments, for example: 

  • You loan money to a friend or family member

  • You buy an item for someone who doesn’t have enough money

  • You pay for an event such as a wedding and want the money back

Using an IOU or not, depends on the relationship you have with the borrower. This document is often reserved for family members, friends, and coworkers. 

If you do not use an IOU, you may have trouble getting your money back. This can cause strain in your relationship with the borrower as well as a legal dispute. 

LawDistrict has IOU forms in PDF available to help you write your agreement. 

How to Write an IOU Letter

You can create your own IOU document by downloading our free printable IOU template. Afterwards, follow these step-by-step instructions to know exactly what should be in an IOU letter: 

Debt Recognition

Fill in the names of the people borrowing and loaning the money. Then include the amount of money being loaned. Add any interest in the amount that must be returned.

Payment Terms and Conditions

Write the name of the borrower, and add that he or she will pay back the full amount. Include the choices of paying the loan back in partial or full payments. If it is partial, mention the frequency of payments. 

Date of Signature and Binding Agreement

Include a declaration that states both parties are bound to the agreement. Write the date the agreement is going to take place. 

Signatures and Witnesses

Write your name and the name of the borrower, and then sign the document. In addition, include the name and signature of any witness, including a notary public.

Difference Between IOU, Loan Agreement, and Promissory Note

If you are planning to loan your money to someone who needs it, it is essential that you ensure you will get your money back

There are different types of agreements and legal documents that can be used for this purpose. 

Besides an IOU, a Loan Agreement and a Promissory Note include a promise from a borrower to repay the loan in full. 

Review the table below to better understand the 3 documents. 

IOU Promissory Note Loan Agreement
Includes only basic information such as names and loan amount Ideal for paying over a longer period of time Includes the right to transfer the debt
Ideal for agreements between family and friends Information about any collateral It can be repaid in installments
It is the simplest to write There are Secured and Unsecured Promissory Notes Includes details about the consequences of defaulting.

IOU Letter Sample

To give you a good idea of how to write the form, we have included a sample of the document below. 

Then, use our free IOU template to complete your form. 

IOU(I Owe You) FAQs

An IOU is not always simple to understand. That is why we’ve included answers to some of the most common questions about IOUs. 

Answering these doubts, we intend to provide you with further information to make the writing process easier.

Is an IOU Legally Binding?

It can be more difficult to enforce this agreement due to its informality. Outlining all the names, amount of the loan, and obligations will make the IOU enforceable and a binding agreement.

Does an IOU Letter Need Witnesses or to Be Notarized?

Depending on the state, your IOU may need to be signed by a witness. Even if it is not required, it is a good idea to have it signed by a witness or a notary public. 

What are the Legal Implications of an IOU?

If the document is signed and states the amount of money that is owed, the borrower will be legally required to pay that amount back.

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