How to write an IOU (free template)
An IOU (“I owe you”) is a short written note saying one person owes another a sum of money. It turns a vague “I’ll pay you back” into a record you both agree on, and it takes two minutes to write.
What an IOU should include
- Both full names: who owes the money and who is owed.
- The amount and currency, written in numbers and in words (“$500, five hundred US dollars”), so nobody can misread it.
- The date the money changed hands.
- What it was for, briefly. It helps everyone remember.
- When it will be repaid: a date, or a schedule of instalments.
- Interest, if any. If there’s none, say so.
- The borrower’s signature. The lender can sign too.
Free IOU template
Copy this, fill in the brackets, and both keep a copy.
IOU Date: [date] I, [borrower’s full name], owe [lender’s full name] the sum of [amount and currency], ([amount in words]). This is for: [what the money was for] I will repay it by [date] [in one payment / in instalments of [amount] every [week/month], starting on [date]]. Interest: [none / [rate]% a year]. Signed: ______________________ (borrower) Signed: ______________________ (lender)
IOU, promissory note or loan agreement?
| What it says | Good for | |
|---|---|---|
| IOU | A debt exists, for this amount | Small, informal amounts between people who trust each other |
| Promissory note | A promise to repay, with dates and sometimes interest | Larger personal loans |
| Loan agreement | Full terms for both sides: schedule, interest, what happens if payments stop | Big amounts, or anything involving property or a business |
Is an IOU legally binding?
It depends where you live, but in many places a signed IOU is strong evidence that a debt exists. Its weakness is that it often says nothing about repayment, which is why the template above includes a date and a schedule. For anything you couldn’t afford to lose, use a promissory note or a loan agreement, and consider asking a local lawyer to look it over. This guide is general information, not legal advice.
Digital IOUs count too
You don’t need paper. A message where the borrower confirms the amount (“Yes, I owe you €300, I’ll pay it back by June”), a bank transfer with a reference, or a shared record in an app all show that a debt exists and what was agreed. Keep them, and keep receipts for every repayment.
With ClearOwe, every amount, date and repayment is kept in one place, and you can send the other person a read-only link to the balance, so you’re always looking at the same numbers.
Tips that prevent arguments later
- Write amounts in words as well as numbers.
- Each of you keeps a copy, or a photo of the signed note.
- Record partial repayments with the date, and update the balance together.
- When it’s fully repaid, mark the IOU “paid in full”, sign and date it.
Common questions
Is an IOU legally binding?
In many places a signed IOU is good evidence that a debt exists, but on its own it often says little about when or how it must be repaid. For larger amounts, a promissory note or a loan agreement with repayment terms is stronger. Rules differ by country, so check locally for anything significant.
Does an IOU need a witness?
Usually not, but a witness, or both people signing, makes it harder to dispute later. For larger sums, some people sign in front of a notary.
Can an IOU be handwritten?
Yes. A handwritten and signed note works, as long as it’s clear who owes whom, how much, and when it was written.
What if the IOU has no due date?
A debt with no agreed date is often treated as payable when the lender asks for it. To avoid that uncertainty, add a repayment date or a schedule.