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The short answer
Write down every family loan: both names, the amount and the currency of the debt, the date sent, any interest, the repayment dates, what happens if a payment is late, and both signatures. In Lagos, an unpaid loan of up to ₦5,000,000 can go to the Small Claims Court after a 14-day letter of demand.
Lending money to a relative in Nigeria is common and often kind: a cousin's school fees, a brother's shop stock, a down payment on a car. It is also one of the most common causes of family quarrels in the diaspora, because the terms lived only in a phone call. A short written agreement does not spoil the gesture. It makes sure both of you remember the same amount, the same dates and the same currency. This guide shows what to put in it.
Why writing it down matters
- Memory fades. Two years later, people sincerely remember different amounts and dates.
- Currency matters. If you lend £2,000 and the loan is repaid in naira, the agreement must say which currency the debt is in. Otherwise a fall in the naira becomes an argument.
- Others get involved. If either of you dies or falls ill, a written agreement tells the family what was agreed.
- It makes the loan real. A relative who signs a repayment plan is more likely to treat it as a loan, not a gift.
What a simple family loan agreement should include
- The names and addresses of lender and borrower.
- The amount and the currency of the debt, for example "₦3,000,000" or "£2,000, repayable in pounds or the naira equivalent at the rate on the repayment date".
- The date the money was sent and how (bank transfer, with reference).
- The purpose, if you want to record it.
- Interest, if any. Many family loans are interest-free; say so.
- The repayment schedule: amounts and dates, and the account to pay into.
- What happens if a payment is late: a grace period, a revised plan, or the full balance becoming due.
- Whether early repayment is allowed.
- Signatures of both parties and, ideally, a witness on each side, with the date.
For a fuller checklist written for Nigeria, see the personal loan agreement checklist.
A worked example, and the currency question
Example only. You lend your brother ₦2,000,000, interest-free, repaid at ₦200,000 a month for 10 months. 10 × ₦200,000 = ₦2,000,000, so the loan is fully repaid after the tenth payment.
Now suppose instead you lent £2,000 and agreed nothing about currency. If he repays in naira at the rate when you sent it, and the naira weakens, you receive fewer pounds than you lent. If he must repay in pounds, he may need far more naira than he borrowed. Neither is wrong; it just has to be agreed. Many families choose to fix the debt in naira, so the borrower knows exactly what they owe.
Interest, fairness and other relatives
Charging interest to family is a personal choice, and many families avoid it. If you do charge it, write the rate and how it is worked out, for example a fixed total added to the amount borrowed, so there is no confusion between a monthly and a yearly figure. If several siblings have borrowed, or if parents are lending too, keep each loan on its own written note. Treating relatives the same way, with the same simple terms, prevents the feeling that one person got a better deal. Tell your spouse or partner about any loan too, since it affects household money.
Recording repayments
- Ask for repayments by bank transfer, not cash through a third person.
- Keep a simple table: date, amount received, balance left.
- Send a short message confirming each payment and the new balance.
- When the loan is repaid, write "paid in full" with the date and both sign or confirm by message.
If repayments stop
Talk first. A missed payment often has a reason, and a revised plan in writing is better than silence. If that fails, the written agreement is what gives you options.
In Lagos, a 2023 practice direction sets up a Small Claims Court for money claims of up to ₦5,000,000, excluding interest and costs. It requires a letter of demand giving 14 days before a complaint is filed, and allows people to represent themselves. See suing at the Lagos small claims court. Time limits also matter: a BusinessDay summary of Lagos law gives six years for contract claims under the Limitation Law 2011. This is information, not legal advice.
Where Pryme fits
Sending the loan by transfer from a Pryme Personal Account gives you a dated record, and you can generate a verifiable receipt or statement through our partner VerifyDoc.ai to attach to the agreement. Your Personal Assistant can remind you to check each repayment date. When you convert pounds with Swap, the app shows the rate and the fee before you approve. For money given to start a business, see protecting start-up money for a sibling.
Questions people ask
How do I write a loan agreement for a family member in Nigeria?
Include both names, the amount and currency of the debt, the date sent, any interest, the repayment schedule, what happens if a payment is late, and both signatures with a witness.
Should a family loan be in pounds or naira?
Either works, but the agreement must say which. Many families fix the debt in naira so the borrower knows exactly what they owe.
Can I take a relative to court in Nigeria for an unpaid loan?
In Lagos, the Small Claims Court hears money claims up to ₦5,000,000 after a letter of demand giving 14 days. A written agreement makes a claim far easier to prove.
Is a WhatsApp message enough as a loan agreement?
A clear message both of you reply to is better than nothing, but a signed agreement with the amount, currency and schedule is stronger evidence.
Sources
- Lagos State Small Claims Court Practice Direction 2023 (file dated 17 Dec 2025) · accessed Oct 2026
- BusinessDay: Nigeria tax record retention, know the rules (2 Sep 2025) · accessed Oct 2026
This article is general information, not financial, legal or tax advice. Products described are provided under the terms on this site and are subject to regulation and eligibility.