How to Write an IOU (Loan Agreement) in Korea — 20% Annual Interest Cap, Repayment Date and 10-Year Limitation Period

Procedure

1. 1. Confirm the transaction

   First confirm the lender, the borrower, the amount, and the payment method and date. A loan for consumption takes effect when one party agrees to transfer ownership of money and the other agrees to return the same amount (Civil Act, Article 598), so the transfer record and the amount in the agreement must match.

2. 2. Set interest and the repayment date

   If interest is to be paid, write the rate. Without an agreed rate, interest-bearing claims carry 5% per year (Civil Act, Article 379), and any agreed rate above the 20% annual maximum is void for the excess (Interest Limitation Act, Article 2, and the Regulation on the Maximum Interest Rate). Write the repayment date and any instalment schedule as specific dates.

3. 3. Draft the IOU

   Write the parties' details, the loan amount (in words and figures), payment date and method, interest rate and interest payment date, repayment date and method, handling of late payment, and the date of writing, then both parties sign or seal it. Make 2 copies of the same IOU and each party keeps 1 copy.

4. 4. Organize supporting documents

   Keep the bank transfer confirmation, copies of both parties' IDs, and the guarantor's signature and details if there is a guarantor. If interest was deducted in advance, the amount actually received is treated as the principal when applying the maximum rate (Interest Limitation Act, Article 3), so record the amount actually paid.

5. 5. Action after the repayment date

   If no repayment date was set, the lender must demand repayment by setting a reasonable period (Civil Act, Article 603(2)). If repayment is delayed, send a certified-content letter based on the IOU and transfer records, and manage the deadline because a claim expires if not exercised for 10 years (Civil Act, Article 162(1)).

Required documents

• No submission form (an IOU is a contract document written by the parties)
• IOU (money loan agreement), 2 copies
• Copies of the lender's and borrower's IDs
• Proof of payment such as a bank transfer confirmation
• Guarantor's details and signature (if a guarantor is added)
• Instalment repayment schedule (if repayment is in instalments)

Fees

Our office fee starts from the amount shown above and may vary depending on the loan amount, repayment terms, whether there is a guarantor and any special terms; we will give you an exact quote after reviewing your documents.

See fees and official charges for this service →

Legal basis and review date

• Civil Act, Article 598
• Civil Act, Article 603
• Civil Act, Article 379
• Civil Act, Article 162
• Interest Limitation Act, Article 2
• Interest Limitation Act, Article 3
• Regulation on the Maximum Interest Rate under Article 2(1) of the Interest Limitation Act

Checked against the statutes on 2026-10-22

Statutes and public notices change, so each case needs to be checked individually. Statute titles are given in English for reference. The Korean statutes are the authoritative text.

Check these first

• If interest was deducted before payment, the maximum rate is calculated on the amount actually received, so record both the IOU amount and the amount actually paid.
• An IOU without a repayment date easily leads to disputes over when to repay, so write a specific date.

Frequently asked questions