You can purchase a simple loan document (called a promissory note) for $10 from legal services web site Nolo. Once you fill it out, all parties should sign it in front of a notary; it’s just a nice bit of formality to have in your pocket in the event that anything goes wrong.
Spell out the specifics in the note: What interest rate you will receive, when the payments are due, how much is due with each payment, and what penalty will be paid for a late payment.
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Tags: Formality, Interest Rate, Loan Document, Notary, Paperwork, Promissory Note, Specifics