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Payment Agreement Form Free – All You Need to Know

Payment Agreement Form Free

For free and impartial money advice and guidance, visit MoneyHelper, to help you make the most of your money.

Whenever you apply for a loan, you need to sign a form to make it official and keep track of it. 

A payment agreement form will contain the terms of your instalment plan as well as details about your debt and the duration of payment. 

In this post, I’ll be detailing what a payment agreement form is and how you can draft one for yourself. 

What is a Payment Agreement Form? 

A payment agreement form will outline the complete payment plan for the debtor. It will also contain all other details regarding the loan as well such as the loan amount, the duration of monthly repayments as well as any other conditions the debtor or creditor might have. 

Payment plans are common when the loan amount is too much for the debtor to pay in one instalment. Due to this, the creditor agrees to receive repayments in the form of instalments that are affordable to the debtor. It’s quite common for debt repayments to be automatically paid via Direct Debit or credit card. 

This is one of the many reasons why it’s important for the debtor and the creditor to be on the same page. 

What is a Payment Plan? 

As the name suggests, a payment plan details how a debtor is going to repay their debts over a certain period of time. 

It details what the minimum payment should be as well as the date of the month when the payment would be due.

What the payment plan looks like will depend on what the creditor(s) and debtor(s) agree on. 

Setting up a Payment Plan 

Before you can draft a payment agreement, you’re going to have to agree on what the terms of the agreement should be. 

For this, you’re going to have to get together with your creditors and negotiate the payments terms with them. 

You can choose to negotiate with creditors on their own or you can hire a debt management company do it for you. 

If you choose to get your payment plan negotiated by another party, it’s important that you choose an organisation that does not charge you for their services. 

If you’re already in debt and are possibly having financial problems, it would make no sense for you to avail the services of an agency that charges you for them. 

Thus, instead, you should choose to go to an independent debt charity for assistance in negotiating with creditors. 

They have trained professionals that will assess your financial situation and negotiate with your creditors on your behalf. 

When you’re negotiating a payment plan with creditors, it’s important to strike a balance between what’s affordable to you and what will be acceptable to your creditors. 

This is something you should discuss with the professional that’s helping you negotiate with your creditors beforehand. 

Interest Rate 

Negotiating the interest rate can be a bit tricky when it comes to setting up payment plans. Your lender may want to put interest on your payments but please know that this is typically not common. 

Most payment plans have little or no interest given that the monthly payments are submitted on time and in full. It’s commonly used as an incentive for debtors to make their instalment payment on time. 

If you do end up with a payment plan that has an interest rate attached to it, it can be a good idea to pay off your debt as soon as possible. 

This would mean that, if you can afford it, you should submit more than the minimum payment every month. 

If you have interest on your debt repayments and you pay off your debts early, you’d be saving a lot of money that you would have otherwise paid in the form of interest. 

share up arrow party lender terms amount

Details and Being Thorough 

It’s important to be as detailed as you possibly can in your discussions with your creditors as well as in the payment agreement form. 

Having terms written down for different situations and scenarios will ensure that disputes don’t arise between the two parties. 

Furthermore, the written payment agreement allows the creditor to prove that a well-planned payment schedule was devised that the debtor was not able to follow. 

It’s important to note that a single-page document is all that’s required to make the payment schedule legally binding to the debtor. 

Details to be included in the Payment Agreement Form 

Details that should definitely be included within the payment agreement form include: 

  • Creditor’s name and organisation (or address)
  • Debtor’s name and address
  • Acknowledgment of the amount owed
  • Details of the amount owed
  • Interest rate (if applicable)
  • Debt repayment duration
  • Payment instructions (details of how the payments are to be made) 
  • Details regarding late payments (if any) 
  • State of governing law 

Once the creditor and debtor sign the document, it becomes legally binding for the two parties. 

Payment Agreement Template

Full, Legal Name Of Debtor

Full, Legal Name Of Creditor

Loan Date

Total loan amount

Payment schedule 

Minimum payment amount

Total repayment duration

Agreement Terms:

I, *debtor name*, borrowed £1,000 from *creditor name* on *loan date*. By signing this agreement both the debtor and the creditor acknowledge that the debtor will pay back the creditor using the detailed payment schedule.

The debtor agrees to repay the creditor with a personal check for £100 on the first of each month for 10 months beginning with January 1, 20__. The last payment will be made October 1, 20__, at which time the loan will be fully repaid.

Both the debtor and the creditor agree to the payment agreement defined above.



Signature of the debtor with Date


Signature of the creditor with Date


Signature of Witness or Notary with Date


Drafting a payment agreement form can be tricky but if you take your time to include all details, you can get it drafted in no time. 

Make sure to clear things out with your creditors beforehand and ensure all information is correct.


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