Expert guide · contract terms

Loan agreement terms — what a promissory note must contain

A loan agreement between private individuals is free-form, but certain terms must be written down for it to be valid and enforceable. Here are all the key terms with statute references.

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Short answer: what a promissory note must contain

A valid promissory note needs six things: both parties identified, the principal in euros, the interest, a repayment schedule with calendar dates, the consequence of late payment, and both signatures with a date. With those the document works in a district court and in enforcement. Without any one of them you create a point that can be argued about later.

Two omissions cause most of the damage. The first is interest: if it has not been agreed in writing, the debt is in principle interest-free and the lender cannot claim a return afterwards. The second is due dates: without them nothing ever falls due, so late-payment interest never starts running and there is no basis for collection.

No notary is required and Finnish law prescribes no form for a promissory note. Witnesses are not a condition of validity, but they make it harder to claim later that a signature is not genuine — the practical threshold sits around €5,000. Vertaislaina24 is not a party to any agreement and gives no legal advice: the service publishes listings and neither grants nor brokers loans.

Overview of the topic

The Finnish Promissory Notes Act (622/1947) does not require a specific form for a loan between private individuals — even a verbal agreement is in principle valid. In practice a written promissory note is essential, because proving a verbal agreement in a dispute is nearly impossible. Below we go through the terms worth writing into every loan agreement.

On interest, the law sets no absolute ceiling between private individuals, but Chapter 36 §6 of the Criminal Code prohibits usury. In practice over 20% annual rate may count as usury, and a court can moderate an unreasonable term (Contracts Act §36). In P2P loans the usual rate is 5–15%.

Late-payment interest is set by the Interest Act (633/1982): reference rate + 7 percentage points, unless otherwise agreed. A reminder fee may be at most €5 and collection costs follow the Collection Act (513/1999). These terms should be clearly written into the agreement.

Collateral is not mandatory, but for large sums (over €5,000) it is recommended. Collateral can be real estate, a car or securities. A secured loan can be collected from the collateral if the borrower does not pay. A large-sum promissory note is worth notarising — then it is directly enforceable without a separate court case.

The clauses: mandatory, recommended and optional

Each clause, what it says and what happens if it is missing, parameters in columns
Clause	Status	What it states	If missing
Identification of the parties	Mandatory	Full name and identity code or business ID	The debt cannot be enforced
Principal	Mandatory	The sum in euros, in figures and in words	Dispute over the amount, burden on the creditor
Interest and its basis	Mandatory in practice	Annual rate, fixed or tied to a reference rate	The debt is in principle interest-free
Repayment schedule	Mandatory in practice	Due dates as calendar dates and the instalment	Late-payment interest never starts running
Late-payment consequence	Recommended	Late interest rate and reminder fee	The Interest Act 633/1982 default applies
Early repayment	Recommended	Whether allowed and how interest is calculated	The creditor may claim interest for the full term
Collateral or guarantee	Optional	The pledged asset or the guarantor and the scope	The claim is an ordinary unsecured claim
Acceleration clause	Optional	When the whole debt falls due at once	Only instalments already due can be claimed
Assignment right	Optional	Whether the claim may be transferred	Transfer always requires notice to the debtor
Signatures and date	Mandatory	Both parties, dated, with any witnesses	The moment of formation is contestable

The table is a general overview, not legal advice. For large or complex arrangements have the draft checked by a lawyer before signing. Work out the instalment in advance with the loan calculator so it matches real repayment capacity.

What people actually argue about

Disputes between private individuals that reach a district court come back to the same short list. The most common is whether the transfer was a loan or a gift. Between relatives this is almost routine: money moved to an account with no document at all, and years later the parties remember it differently. Without a written agreement the burden of proof lies on whoever asserts that a claim exists.

The second recurring dispute concerns interest. A rate agreed orally is a recollection, not a term. The Interest Act recognises no default rate for the loan itself — only a default for late-payment interest. In practice an unrecorded rate is zero, and the lender loses that money permanently.

The third is the allocation of payments. When a debtor has paid irregular amounts without a reference and the agreement contains no allocation rule, the parties end up calculating the remaining principal differently. The fix is simple and free: the same reference in every payment and a clause stating whether payment goes first against interest or principal. This detail is also covered on risks of peer-to-peer lending.

Source: The Promissory Notes Act 622/1947 and the Interest Act 633/1982, together with public guidance from the Finnish Competition and Consumer Authority’s debt counselling service; data checked in August 2026.

Writing the clauses one by one

The order matches the finished document. Write each clause in one sentence — long legal prose does not improve validity, it only adds room for interpretation.

1
Title and parties

Head the document “Promissory note”. Below it, the full names, identity codes and addresses of creditor and debtor. If a party is a company, the business ID and the signatory’s authority.
2
Principal and payment date

The sum in figures and in words, plus the date the money is paid to the debtor. Record the account number the principal is transferred to as well.
3
Interest

The annual rate as a percentage and whether it is fixed or tied to a reference rate. If the loan is interest-free, state that explicitly — otherwise the point stays open.
4
Repayment

The instalment, the monthly due date and the final due date. Or a single payment on one date. Phrases like “when circumstances allow” make collection impossible.
5
Late payment

The late-payment interest rate and any reminder fee. Without this clause the Interest Act default applies: the reference rate plus seven percentage points.
6
Collateral and special clauses

Pledge, guarantee, early repayment, acceleration and assignment. These are optional but decisive in a dispute — see what they are defending against.
7
Signatures

Place, date, both signatures and printed names. Two copies, one for each party. Two witnesses for loans above €5,000.

Route planner: three questions, one recommendation

Peer-to-peer lending is not a single product but a set of different routes. Answer three questions to see which route fits your situation and what to read next. The tool collects nothing and sends nothing to a server — everything runs in your browser.

Question 1.Which side of the table are you on?

I need money I have money to invest I am writing an agreement for someone I know

Question 2.What size of sum are we talking about?

Under €2,000 €2,000–15,000 Over €15,000

Question 3.How does the credit record look?

Clean There is a payment default Do not know / not relevant

Recommended route

Answer all three questions to see the recommendation.

Below €2,000 an arrangement fee eats the largest relative share of the loan. Write a listing that states the purpose and the repayment dates, and work out the total cost with the loan calculator before you agree on a rate. Background: how P2P lending works in Finland.

The most common P2P range. Compare the platforms’ real annual cost against your own offer first: Fellow Finance, Fixura. If you want to agree directly, write the agreement terms down before any money moves.

Above €15,000 collateral and witnesses are not a formality. Go through the contract terms clause by clause and check the risks on both sides before signing.

With a small pot, diversification is the only protection you have. Do not put everything into one listing — read how to calculate expected return and credit losses and follow the active listings before the first agreement.

At this size it is worth comparing platform investing and a direct agreement side by side: the platform handles collection, a direct agreement leaves the whole interest to you. Background: P2P mechanics and AuroraX.

With large sums, collateral and enforceability decide whether you get your money back. Read the terms, the risks, and check what a credit default actually means for the counterparty.

Even a small loan to a friend is worth putting in writing. Use a promissory note structure and add a reference in the bank transfer message field — that is the only proof when memories differ.

Write down the interest, the due dates and the consequence of late payment. Without a written interest the debt is interest-free, and without due dates late-payment interest never starts running. See the wording of each clause.

For a large promissory note, two witnesses and collateral are the practical minimum. Read the agreement terms and the risk list before signing.

A clean credit record is a negotiating asset: say plainly in the listing that there are no entries, and the other side dares to offer a lower rate. The cheapest route is still usually a bank consumer loan — put that out to tender first and use P2P only if the terms are not acceptable.

A payment default closes the bank and most platforms, because they run an automatic credit check. On a classifieds board a default does not block publishing, but honesty pays: read what options remain and how to word the listing.

If you do not know the state of your credit record, check it before applying for anything. You can obtain your own credit data free of charge once a year from the register keeper. After that you know whether to go to a bank or straight to the listings board.

Four formal requirements worth getting right

These are not substance but form, which is exactly why they get forgotten. Each of them has sunk an otherwise clear claim in court.

Two original copies

One signed original for each party. A photocopy or a phone photograph is weaker evidence if the other party disputes the content.

A date with every signature

The moment of formation determines when limitation starts and which terms were in force. An undated signature leaves that open.

Changes in writing

If a due date moves or the rate changes, make a written annex signed and dated by both. Oral flexibility leaves no trace afterwards.

An agreed payment reference

One reference or message text used in every payment. This removes any argument about which instalment a payment covered.

If the counterparty rejects the proposed terms

Negotiations typically break down over three points: the rate, the collateral and the term. The same remedy works for all three — reduce the amount. A loan half the size over a shorter term is a completely different risk from the counterparty’s point of view, and it shifts the negotiation more than any argument does.

If the counterparty insists on clauses you do not understand, do not sign. Be particularly careful with an acceleration clause: it can make the entire debt fall due at once because of a single late instalment. The same goes for a guarantee — an absolute guarantee means the guarantor answers for the debt as if it were their own, without the creditor having to pursue the debtor first.

Reduce the amount or shorten the term before raising the rate — it is the cheaper way to reach an agreement.
Offer collateral or a guarantor if the counterparty hesitates. That lowers the rate more than any other clause.
Do not sign a clause whose consequences you cannot explain aloud in your own words.
If the draft is complex or the sum large, have it checked by a lawyer. A one-off consultation is cheap against the risk.
If several debts already exist, the right address is free municipal debt counselling rather than a new agreement — background on what remains when credit is refused.

A written agreement weighed up

Advantages: what this route gives you

+It removes the argument over whether the transfer was a loan or a gift.
+It makes the claim enforceable through a judgment.
+It protects the debtor from invented terms just as much as it protects the creditor.
+It ends uncertainty about payment allocation once a reference is agreed.

Drawbacks and limits: where it breaks down

−It requires the counterparty’s identifying details, which not everyone will give.
−A badly drafted clause can be worse than no clause at all.
−Changes require a new written annex, which feels rigid.
−It does not help if the debtor has no assets — an agreement does not create the ability to pay.

Who this is not for

×There is no situation where a written agreement is a bad idea.
×A ready-made template does not fit complex arrangements as it stands.
×Above €30,000 or with collateral, a lawyer’s review is justified.
×Company financing needs additional clauses on authority and guarantees.

Mandatory vs. recommended terms

Usual solution

• Parties: names, ID numbers, addresses
• Loan principal in figures and words
• Interest: annual nominal rate (max ~20%)
• Repayment period and due dates
• Signatures of the parties

Vertaislaina24

✓ Late-payment interest (Interest Act: ref + 7%)
✓ Collateral for large sums (>€5,000)
✓ Two witnesses
✓ Notarisation (enforceability)
✓ Early-repayment clause

Legal framework: which act governs what

The Promissory Notes Act 622/1947 is the central statute here. It prescribes no form, so no notary and no official template are needed. The act distinguishes ordinary and negotiable notes: in an ordinary note the debtor’s defences survive an assignment, in a negotiable one they do not. A loan between private individuals is in practice always an ordinary note, which is the safer form for the debtor.

The Interest Act 633/1982 governs late-payment interest. Absent an agreement, it is the Bank of Finland reference rate plus seven percentage points. Notably, the act recognises no default for the loan interest itself — an unagreed rate is zero. The general limitation period is three years and it is interrupted by a written reminder.

Unreasonable terms are addressed from two directions. Section 36 of the Contracts Act 228/1929 allows a court to moderate or disregard an unreasonable term, and Chapter 36 Section 6 of the Criminal Code 39/1889 criminalises usury. Chapter 7 of the Consumer Protection Act does not apply between two private individuals, but it applies at once if one party grants credit professionally — and professional lending requires registration under Act 186/2023. The service’s position is described on legal status.

Key Finnish statutes applying to a loan between private individuals
Act	Number	What it governs	Practical consequence
Promissory Notes Act	622/1947	Form, transfer and limitation of a promissory note	A written note is valid without a notary; transfer requires notice to the debtor
Interest Act	633/1982	Late-payment interest and how the rate is set	Without a contract term, late interest is the reference rate + 7 percentage points
Consumer Protection Act	38/1978, ch. 7	Consumer credit granted by a trader	Does not cover a loan between two private individuals — but does cover anyone lending professionally
Criminal Code	39/1889, 36:6	Usury	A clearly disproportionate rate can be a criminal offence, not merely an invalid term
Contracts Act	228/1929, §36	Adjustment of an unreasonable term	A court can afterwards moderate the interest or the payment terms
Act on Registration of Certain Credit Providers	186/2023	Registration of credit providers and intermediaries	Professional lending requires registration; a classifieds board is not credit intermediation

The table is a general overview, not legal advice. In an individual case, use a lawyer or the municipal financial and debt counselling service.

Spotting a scam before the money leaves

In agreements made directly between private individuals there is no platform background check, so recognising fraud is the parties’ own responsibility. These signals repeat in almost every case we have heard about.

An advance fee before the loan. There is no situation in which receiving a loan requires a “handling fee”, “insurance fee” or “notary fee” paid up front. This is the most common loan scam in Finland.
Urgency and deadlines. “The offer is valid for one hour” is pressure, not a term. A real lender gives you time to read the agreement.
Contact only through a messenger where messages disappear. Ask for every term in writing, by email or in the agreement itself.
The counterparty refuses to give a personal identity code or business ID for the agreement. Without identification a promissory note cannot be enforced.
A request to send money to a third person’s account, in cryptocurrency or on a payment card. A lawful loan is paid by bank transfer to the named party’s account.
For investors: the applicant wants the money immediately but refuses to sign a promissory note. Without a written agreement, collection is practically impossible.

If you suspect a crime, report it to the police. Lender registration can be checked in the register kept by the Regional State Administrative Agency for Southern Finland, and the Finnish Financial Supervisory Authority maintains a warning list of operators without authorisation in Finland. More on this on risks of P2P lending.

Never sign a promissory note stating a principal larger than the sum you actually received, and never sign a blank document with fields to be completed later. Both are standard ways of hiding an unreasonable rate inside a term, and once signed they are extremely hard to challenge.

How the listings board actually works

Vertaislaina24 is not a platform that slices loans into pieces and runs the payments. It is a classifieds board: you write a listing, the other party gets in touch, and everything after that happens between the two of you. Four steps cover the whole process.

Listing

You state the amount, the term you want, your interest expectation and a short justification. The more concrete the text, the fewer pointless contacts. Prices are on the pricing page.

Contact

The other party contacts you through the service. We do not score either side and we do not recommend anyone — the judgement is yours. You can browse active listings without registering.

Agreement

Terms go into a written promissory note before any money moves. The wording of each clause is on loan agreement terms.

Payments

Money moves directly between bank accounts. The service neither receives nor forwards payments, so the transfer visible on your bank statement is itself your proof of payment.

Vertaislaina24 does not grant loans, does not broker them and takes no part in payments between the parties. We are not a credit institution and not a credit intermediary, and we charge no interest or commission on any loan. The only charge is the fee for publishing a listing.

Glossary: the words the terms are written in

The same thing often goes by three names in P2P discussions. These six terms are enough to read a draft agreement without help.

Nominal interest: The annual rate written into the agreement, excluding fees. Two loans with the same nominal rate can cost very differently if one carries an arrangement fee.
Annual percentage rate: The rate with all mandatory costs included. The comparable figure, which you can work out yourself with the loan calculator.
Annuity: A repayment method where the monthly instalment stays the same and the interest share of it shrinks over time. The most common model in private agreements too.
Late-payment interest: Interest that runs after the due date. Under the Interest Act 633/1982 it is the reference rate + 7 percentage points unless otherwise agreed.
Payment default entry: An entry in the credit information register for a neglected payment. It affects borrowing for years — see what a default actually blocks.
Collateral: Property from which the debt can be recovered if the debtor does not pay. Without collateral the creditor is an ordinary creditor among others.

Frequently asked questions

What is the maximum allowed interest on a private loan? +

Between private individuals there is no absolute ceiling, but Criminal Code 36:6 prohibits usury. Over 20% annual rate may count as usury, and a court can moderate it. The usual level in P2P loans is 5–15%.

What is the late-payment interest if the agreement does not mention it? +

Under the Interest Act (633/1982), late-payment interest is the Bank of Finland reference rate + 7 percentage points, unless otherwise agreed (a higher rate can be agreed as long as it is not unreasonable).

Does a loan agreement need witnesses? +

Not required by law, but recommended especially for large sums. Two witnesses confirm the signatures are genuine. Notarisation makes the agreement directly enforceable.

Can loan terms be changed later? +

Only if both parties agree in writing. Changes should be recorded in an annex signed and dated by both parties.

Is collateral mandatory? +

No. An unsecured loan is fully legal. Collateral (car, real estate) protects the lender and is recommended for loans over €5,000.

What if a term is unreasonable? +

Under Contracts Act §36 a court can moderate or disregard an unreasonable term (e.g. a disproportionately high interest or late-payment penalty). This also applies to agreements between private individuals.

Is an electronically signed promissory note valid? +

Yes. In Finland an electronic signature is in principle as valid as a handwritten one when the signatory has been reliably identified. In practice a signing service based on strong authentication is even better evidence than paper, because it records a timestamp and the identification event.

Can the terms be changed afterwards? +

Yes, if both parties agree. The change is made as a written annex, signed and dated by both. Neither side can change terms unilaterally unless the agreement expressly allows it — a rate tied to a reference rate, for instance, moves automatically without a new agreement.

What does an acceleration clause mean? +

It is a clause under which the whole remaining debt falls due at once if the debtor fails, for example, to pay two consecutive instalments. It is effective for the creditor and harsh for the debtor, so the threshold should be written precisely rather than left open to interpretation.

Are witnesses required? +

Not for validity. Witnesses do make it harder to argue later that a signature is not genuine or that the signatory did not understand what they were signing. The practical recommendation is two witnesses above €5,000 and always when the parties do not know each other.

How is interest calculated if the loan is repaid early? +

Entirely according to what the agreement says. In consumer credit early repayment is a statutory right and interest is charged only for the actual credit period, but between private individuals the equivalent clause has to be written in. Without it the creditor can in principle claim interest for the whole agreed term.

Can the claim be sold on? +

Yes, unless the agreement prohibits it. Under the Promissory Notes Act the transfer only takes effect against the debtor once the debtor has been notified — before that, the debtor can validly pay the original creditor. If you do not want your claim transferred, write an assignment prohibition into the agreement.

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