A Promissory Note is somehow similar to a Loan Agreement Contract. However, the contents of a Loan Agreement Contract are much more extensive than that of a Promissory Note. From the name itself, a promissory note is a note that makes a declaration or a promise to pay and is used as a legal document to ensure that the buyer promises in writing to pay the amount being loaned.
A Promissory Note is also considered to be a type of written agreement. You can also view more promissory note examples from our archive of Agreement Forms which are available in DOC or in PDF format for easier and quicker download.
Free Promissory Note Agreement Form
Promissory Note Modification Agreement Form
Promissory Note Extension Agreement Form
Promissory Note Purchase Agreement Form
What Is A Promissory Note?
A Promissory Note is commonly dubbed as “a promise to pay” and is a mainstream financial instrument in many jurisdictions and in financial institutions. The acceptance of a promissory note can vary from organization to organization, depending on the policies that have been established. You can also view our Security Agreement Forms for more agreement form contracts.
What Are The Types Of Promissory Notes?
Because promissory notes are considered to be a form of a loan agreement contract, their varieties are also synonymous or co-related. Below are the different types of promissory notes:
Secured Promissory Notes. Secure promissory notes are those that have an attached collateral to it, or an item that has a secured value. These items are then sold or repossessed if the borrower fails to make a payment or has a default. Examples of such loans are mortgages and auto loans wherein the house or the vehicle is taken by the bank if a borrower defaults from payment.
Unsecured Promissory Notes. An unsecured promissory note is a loan without any attachments and bank solely on the borrower’s word to pay the money being owed.
Promissory Note Agreement Form PDF
Promissory Note Agreement Form Example
Promissory Note Agreement Form in Word Format
Generic Promissory Note Agreement Form
What Are The Essential Elements of a Promissory Note?
In most states, a promissory note usually contain the following key information:
- The complete name of the payor or the person who is obligated and promises to pay off the loan.
- The complete name of the payee or the lender. This is the person or the name of the organization who lent the money.
- The date of the promissory note that is deemed effective. This is important especially if the loan is to be paid in terms or has an expiration date.
- The amount being owed or the total amount of money that is owed by the borrower.
- The terms of interest. Although interest rates are regulated by federal and state laws, be sure to check with your state mandated laws. Interest rates can be simple interest or compounded interest among other ways to calculate interest.
- The installment plan. If the payment of the debt is chunked into installments, the dates or schedules of subsequent payments should be indicated in the form.
- The date wherein the note ends. This date could be amortized and paid off in a series of even and equal payments on a certain date.
- Penalties or fees. Some lenders usually charge late payments while others provide zero interest rates for a period of time, usually for the first 6 months.
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