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Demand Letter for Repayment of a Loan (Free Template)

Ethan DePalma - Breach of Contract - October 13, 2023

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    Did you lend someone money, but they have not paid you back? Before taking them to small claims court, consider sending a demand letter for repayment. In this article, we go over the steps to writing a demand letter for repayment, provide a sample demand letter, and discuss the reasons why sending a demand letter before taking legal action is a good option.  

    Did you know we have a free tool powered by AI that helps you create a demand letter? Check out our demand letter tool.

    Why is Sending a Demand Letter a Good Idea?

    A demand letter is a document that states a request you would like someone to fulfill. In the case of a demand letter for repayment, you are requesting that someone pay you back for the money you lent them. 

    Here are some reasons why sending a demand letter for repayment of a loan before taking legal action: 

    • Depending on what state you are filing a small claims court lawsuit in, you may be required to demand payment before filing. For example, in California, you are required to ask for payment before suing in small claims court.  Demand letters are an effective way of completing this requirement. 

    • Demand letters signal to the person or business receiving the letter that you are serious about the problem and are willing to spend time and money to get your money or property back.

    • When you let someone know that you intend to go to small claims court if they don't return your money, it can have a big effect on them returning your money without having to go to court.

    How to Write a Demand Letter for Repayment of a Loan

    Writing a demand letter may seem like a daunting task, but we have broken down the basic steps below to help you write a strong and effective demand letter for repayment. 

    • Step 1. Identify the parties and address the letter accordingly: The letter should start by identifying the sender (the person who is requesting the money) and the recipient (the person who owes the money). You will also want to state how the letter is being sent (for example, via FedEx or USPS). 

    • Step 2. Provide a statement of the demand: The main purpose of the demand letter is to make a demand. In this case, how much does the person you loaned the money to owe you?  

    • Step 3. Write down the important facts: Include the most important details of your dispute in the body of your letter. For example, if you lent your roommate money to help cover their share of the rent, you will want to include how much rent is, how much each of you normally pays for rent, when you loaned the money, etc. 

    • Step 4. State any settlement terms or offers: Outline the terms you are willing to accept that would resolve your dispute. For example, if the person owes you a significant amount of money and you are comfortable with installment payments, offer a plan for repayment in your demand letter. 

    • Step 5. Explain how you would like to be repaid: If it is a friend who owes you money and Venmo or Paypal is the easiest way for them to pay you back, you may want to list those options. If someone who you don’t personally know owes you money (like a contractor), the most common way for them to pay you is via a check, so you may want to consider including your address so they can mail a check to you.

    • Step 5. Provide a deadline: Consider giving the person who owes you money 7-14 days to respond to you and state that if they do not respond within that time, you intend to sue them.

    • Step 6. Wait for a response: Once you send your demand letter, you will need to wait to see if the person responds within the deadline you provided. Learn more about how long it can take to hear back after sending a demand letter. 

    Here are some additional steps you can take when writing your demand letter: 

    • Optional Step 7. Include other forms of settlement you are open to: State whether or not you are open to dispute resolution methods like mediation. 

    • Optional Step 8. Documentation: Include a copy of any relevant documentation, such as a written loan agreement, receipts, emails, or other correspondences, to help strengthen your demand letter. 

    Sample Demand Letter for Repayment 

    Did you know we have a free tool powered by AI that helps you create a demand letter? Check out our demand letter tool.

    Below is an example of a demand letter to pay that can be used as a template. This free sample demand letter to pay is for a personal loan to an ex-roommate. Remember, this is only an example of a demand to pay. Use case-specific details when writing your demand letter.  


    888 N. Windfall Drive

    Lansing, MI 48910

    October 5, 2023


    888 N. Windfall Drive

    Lansing, MI 48910

    Via FedEx

    Dear Ex-Roommate,

    I am contacting you demanding payment for $900. This letter is an attempt to resolve this matter outside of court, however, if we cannot come to an agreement, I intend to sue. 

    I intend to submit the following case to the court:

    I loaned Ex-Roommate $900 on July 23, 2023, to help them pay for repairs to their car. As agreed upon at the time of the loan, repayment was expected in full by August 23, 2023. However, as of today, October 5, 2023, the loan amount remains unpaid, and Roommate refuses to take any of my calls or messages. If immediate repayment of the full $900 is too difficult, I can accept $100 payments through Zelle until the full $900 is repaid.

    I hope to resolve this matter amicably, and I am open to discussing mediation. You can contact me at [email protected] if you would like to discuss this matter further. Please send me a check written to the name and address written above. 

    If I do not hear from you by October 19, 2023, you leave me no alternative but to file a lawsuit against you. In the event of a lawsuit, I intend to seek redress to the fullest extent permitted by law, including, but not limited to, additional damages, legal services costs, court costs, and accrued interest. 




    How to Send a Demand Letter for Repayment 

    We recommend sending your demand letter to pay via email or mail. For mailed demand letters, consider the following:

    • Tracking. With tracking, you will know if your demand letter to pay has reached the person who owes you money. 

    • Signature Required. You do not necessarily need a signature request. When you send a letter with a signature requested, the postal carrier must hand-deliver the letter, and the person who is receiving the letter must sign the letter. 

    Once the post office attempts delivery 2-3 times, the post office returns the letter to the sender as "undeliverable." We don't recommend sending letters to people at a home address with a signature required in case there is no one home to sign at the time of delivery

    Next Steps After Sending a Demand Letter for Repayment 

    You sent a demand letter to the person who owes you money, but they won't respond or still refuse to repay the loan; now what? It may be time to consider taking legal action against them by suing them in small claims court

    Small claims courts handle a variety of cases at a low cost, including cases involving money owed. Small claims courts were intended to be affordable and user-friendly. In some small claims courts, attorneys are not even allowed to represent you! Consider filing a small claims lawsuit if you are not able to get your loan repaid. 

    Here are some common small claims lawsuits involving loans: 

    • You loaned a friend money to help with their living expenses, but they keep avoiding your calls and request to be paid back. 

    • A family member's car broke down, and you loaned them money to fix the car, and they refuse to pay you back. 

    • Someone broke a loan agreement they made with you, and they won’t pay back the loan amount. 

    Learn more about what you can legally do when someone owes you money. 


    Ethan DePalma

    Legal Educator @ People Clerk. Passionate about breaking down court processes in simple, easy-to-understand ways.

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