What is a car lending agreement?
A car lending agreement, sometimes called a vehicle loan or car borrowing agreement, is a short contract for lending your car to someone you know, as a favour rather than a commercial rental. Most loans go fine. When they don't, the argument is usually about a speeding ticket that arrives weeks later, a scrape nobody noticed at handover, or who pays the insurance excess. Agreeing those points in writing first protects the car and the friendship.
This template covers the car and its condition at handover (with an odometer reading and existing damage), the loan dates and return place, where the car may be driven and any distance limit, what the borrower must not do (paid driving, towing, racing, lending the keys), pets, who may drive, the insurance arrangement, fuel or charge, parking and tolls, an optional contribution, traffic fines and naming the driver, accidents and breakdowns, paying for damage (limited to the excess where insurance pays, if you enter one), returning the car, and the governing law. Both parties initial each page and sign.
- Best for
- Lending a car to a friend, relative or neighbour for a day, a trip or a few weeks
- Signed by
- The owner and the borrower (the main driver)
- Insurance
- The owner's policy, the borrower's own cover, or temporary cover bought for the loan
- Length
- About 3 pages, initialled on every page
When to Use a car lending agreement
- Lending your car to a relative for a holiday or a house move
- Letting a friend use your car while theirs is being repaired
- Lending a second car to a student or young driver in the family
- Leaving your car with a neighbour to use while you're abroad
- Letting a friend borrow a van or large car to move furniture
What You Fill In
27 blanks, then the name and email of each person who signs: owner, borrower.
1 The owner and borrower
- Owner's full name*
- Owner's phone*
- Borrower's full name*
- Borrower's address*
- Borrower's driving licence number
2 The car
- Make, model and colour*
- Registration / licence plate*
- Existing damage and condition at handover
3 Dates and use
- Borrowing from*
- Handover time
- Return by*
- Return time
- Return the car to*
- What the car is for
- Where it may be driven*
- Odometer at handover
- Distance limit
- Pets in the car* not allowed · allowed in a crate or on a seat cover
4 Drivers and insurance
- Who may drive* Only the Borrower · The Borrower and the additional drivers named below
- Additional drivers
- Insurance* The Owner's insurance covers the Borrower to drive the car · The Borrower has their own insurance that covers them to drive the car · The Borrower will buy temporary insurance for the loan period
- Insurer and policy number
5 Money
- Currency*
- Insurance excess / deductible
- Contribution for using the car
- Fuel or charge* The Borrower returns the car with the same fuel or charge level as at handover · The Borrower pays the Owner for the fuel or charge used · Fuel or charge is included
- Governing law*
6 Who signs
- Owner signature and date, initials on every page
- Borrower signature and date, initials on every page · The main driver, who takes responsibility for the car while it is borrowed.
What the car lending agreement Covers
- The car
- Dates and use
- Drivers and insurance
- Fuel, costs and contribution
- Fines and penalties
- Damage, breakdown and accidents
- Returning the car
- General
Using the car lending agreement, step by step
1 Describe the car and its condition
Enter the make, model, colour and plate. Note any existing damage and the odometer reading, or leave the reading empty to write it in at handover. Take dated photos of every side and the interior at the same time. The agreement refers to them.
2 Set the dates and the rules of use
Enter the start and return dates, times and return place, and what the car is for if you like. Say where it may be driven and add a distance limit if you want one. The agreement already rules out paid driving such as ride-hailing or delivery, towing, racing and lending the keys on. Choose whether pets are allowed.
3 Get insurance right
Choose who may drive (only the borrower, or named extra drivers) and how the borrower is insured: under your policy, their own, or temporary cover. Add the insurer and policy number and the excess or deductible. Check with your insurer before lending. Whether a policy covers another driver depends on the policy and on local law.
4 Agree fuel and money, then sign
Choose the fuel or charge rule and any contribution towards running costs. Fines, tolls and parking during the loan are always the borrower's. Enter the governing law, add the borrower as a signer and send. You both initial each page and sign, ideally before the handover.
Tips Before You Send It
- Call your insurer before lending. Some policies cover any driver with permission, others only named drivers, and some exclude young or newly qualified drivers.
- Photograph the car, the fuel gauge and the odometer at handover and return. Five minutes now prevents most disputes.
- Ask to see the borrower's driving licence, and write the number in the agreement.
- Traffic fines often arrive weeks later and go to the registered keeper. The agreement makes the borrower responsible, and you may be able to name them as the driver where the law allows.
- For longer loans, agree who handles a service or warning light that comes on while the borrower has the car.
Sign It Online In Minutes
- Fill in the blanks. Names, dates and amounts go straight into the agreement — the preview shows exactly where.
- Name who signs. Tick “This is me” for your own part. VergeHR builds the PDF with every signature, date and initials box on the right line, and you can check or move anything before sending.
- Send it. Each signer gets a secure link and signs from any device — no account needed. The signed PDF, with an audit trail and a Certificate of Completion, is filed in Files and emailed to everyone.
Car lending agreement: frequently asked questions
Who pays if the borrower damages my car?
Under this agreement the borrower is responsible for damage, loss or theft during the loan, apart from normal wear and tear and mechanical faults they didn't cause. If insurance pays, the borrower pays you only the excess or deductible, plus any premium increase the claim directly causes if they or another permitted driver were at fault. If someone else caused it, the borrower pays only what can't be recovered from that person or their insurer. Costs caused by breaking the agreement, such as letting an unpermitted driver use the car, are the borrower's whether or not insurance pays.
Who pays speeding and parking fines?
The borrower pays every parking ticket, camera fine, toll penalty and other traffic penalty from the loan period. If a notice comes to you, the borrower pays it promptly, or you may name them as the driver where the law allows.
Can I charge for lending my car?
You can ask for a contribution towards running costs, which the agreement records. Charging more than that can turn the loan into a rental, which may need a commercial licence or different insurance. Check with your insurer before taking money.
Is a car lending agreement signed online valid?
Electronic signatures are generally valid for ordinary agreements like this in the US (ESIGN Act and UETA), the UK, the EU (eIDAS) and Canada. VergeHR keeps an audit trail and a Certificate of Completion with the signed PDF as a record of who signed and when.
Is this template free?
Yes. The template is free to use with the eSignature app in VergeHR, and the people you send it to don't need a VergeHR login to sign.