text: Pre-made contracts/agreements are very complicated documents. If you don't know EXACTLY what that document says, you can still get shafted like you didn't have a contract in the first place. \n\nYou should do two things: 1) type a common sense letter that details how much was borrowed, the date the loan must be repaid, etc. and have the borrower sign and date it.  You keep the original. A copy can be given to the other guy.\n\nThen 2) DO NOT make the loan in cash. It should be a check. You should indicate that it's a loan on the memo line (something like "Loan to Jack to be pd 8/1/06"), and you need to keep the cancelled check in a safe place.\n\nSince it sounds like you want the option of taking legal action, find out what the maximum amount is for small-claims court in the city/county where you live and where the other guy lives.  If small-claims court will only accept cases for $5,000 and under -- don't lend more than that.\n\nThat way if you have to go to court, you can do it on your own in small claims court instead of hiring a lawyer.\n\nAnd I think it goes without saying... but don't accept cash or personal checks as payment. Get it in money order or cashier's check.