IOU Loan Agreements are an arrangement between two parties through which one party (the borrower) incurs a debt and promises to pay it back to the other party (the lender). The terms may include interest or collateral, and the loan is typically documented in writing. By creating a formal agreement, each party can clearly establish their rights and responsibilities regarding the repayment of the loan. With an IOU Loan Agreement, both the lender and borrower can rest assured that they know exactly what is expected of them throughout the repayment period.