Introduction of Promissory Note template:
A Promissory Note is a legal agreement between two parties, which includes a lender and a borrower, and it serves as a written and enforceable agreement between both the parties. A promissory note provides complete details of money, property, or other assets that you’re lending or borrowing to someone.
Promissory notes are often used by individuals or companies when they lent or borrowed money as a guarantee that money will be repaid on a specific time.
Promissory Note template
The principal promise of repayment is usually unconditional, which means the payment should be repaid regardless of whatever happens between the Lender and the Borrower.
A promissory note may contain some terms and conditions after the discussion between both parties, the Lender and the Borrower. As long as the terms and conditions are clearly stated, and both are understandable and agreeable by both parties, there should be no need to seek legal expertise.
Promissory Note can also be referred by other names such as IOU, Contract, Promise to pay letter, Personal loan agreement, commercial paper, Loan agreement or Loan Note, Finance note, etc.
Secured Promissory Note template Free
Types of promissory notes template:
A Promissory Note has two different types:
1- Secured Promissory Note.
2- Unsecured Promissory Note.
Secured Promissory Note template:
In Secured Promissory Note, the Borrower is legally agreed to pay back the principal loan during the specified time, and if he fails to do so, then he has to surrender his property or assets to the Lender. By using a secured promissory note means you have a legal right to the Borrower’s tangible or intangible property.
Unsecured Promissory Note template
In unsecured Promissory Note, the Lender can not secure the Borrower’s assets or property if the loan is not repaid. However, it includes higher interest rates, which are favorable to the Lender. If the Borrower doesn’t repay the agreed payments, the lender can take legal action against him.
Promissory Note Example
The Usage of Promissory Note templates:
A Promissory Note is used when someone borrows or lends the property, money, or other assets, and it includes the payment details, property details, asset details, Interest details, Principals, and the specified time limit details.
If you are borrowing or lending the money to someone, you should use a promissory note as it will serve as a reminder between both the parties, the Lender and the Borrower.
Promissory notes can also be used for;
Purchasing or selling a car.
For business funds.
For personal loans.
For student or real estate loans etc.
Free Promissory Note template Word
How to Write a Legal Promissory Note:
A Legal Promissory Note should clearly state some basic information such as:
– The date of the promissory Note?
– Who is the Borrower, and who are the Lender and their details?
– Property, money or other assets details which you are borrowing or lending?
– Principal & Interest Rates?
– Type of promissory Note, whether it is secured or unsecured?
– The specified time limit in which the money or other assets has to be payback?
– Signatures of both Borrower & Lender & their witnesses?
Why Is a Promissory Note a Valuable Tool?
A Promissory Note is very important if you are running a business & receiving funds, or you are lending or borrowing property or any other assets to keep a proper and legal record of everything which you borrow or lend to someone as it provides a clear structure of payments of debts. Promissory Note also protects the Lender from default and the Borrower from unscrupulous lending practices.
A promissory note is a legal agreement that secures the rights & obligations of both the parties (the Lender and the Borrower) in case of any misfortune. So it is important for both the Lender and the Borrower to read the terms and conditions very carefully before signing a promissory note. If anything happens between both parties, a promissory note will serve as a reminder and can solve many problems for both the Lender and the Borrower.