Leave spaces for both lender and borrower to sign and date the page. Signature PageĬonclude your note with a signature page. Typically, a loan includes guidelines for how a borrower can get back on track after a missed payment. Will your loan include penalties for late fees or skipped payments? If you don’t include them in the promissory note, you can’t demand them later. Personal loans, lines of credit, and credit cards are all types of unsecured loans. Most unsecured loans require good credit because the loan relies on nothing but the borrower’s promise to pay. Unsecured: An unsecured loan does not involve any collateral. They may be the only choice for borrowers with weak credit. Secured loans and title loans are suitable for large, expensive items. Pawn loans are another type of title loan. If the borrower defaults, the lender keeps the car. In this loan, a borrower uses their car title as collateral. Automobile loans work the same way.Ī title loan is a different type of secured loan. If you default on the loan, the lender can take back the house. In a real estate loan, for instance, the house is the collateral. Secured loan: A secured loan uses the borrower’s property as collateral. The wording of your promissory note will depend on the type of loan it is. Will the repayment be in installments, or will the loan require one lump sum payment? Be sure you specify this clearly in the note. This is the most important part of the promissory note. By law, you must also include the total payoff amount including interest. Your note must include the full loan amount. Your promissory note must list the name and address of the lender, name and address of the borrower, and the date. You can find free promissory note templates online, or you can use this guide to write your own. Your promissory note should contain information about the loan. How To Prepare a Notarized Promissory Note If either party needs legal proof of the agreement, a signed promissory note will carry more weight than other documents. A notary is an independent third party who can verify both parties’ identities and their willingness to sign a contract. Loans between friends or family membersĪlthough some loans don’t require a notary, it’s smart to get a notarized note.The most common uses of a promissory note are: If you’ve ever taken out a loan from a bank, you have probably seen a promissory note. A promissory note can protect you from a borrower who demands more than the original amount. It helps you understand the payment schedule and keep track of your receipts. You also need one if you’re the borrower. It’s also your legal proof that the money was a loan and not a gift. It allows a borrower to understand the payment terms and the payoff date. Oral contracts don’t carry as much weight as a notarized promissory note you have both signed.Ī promissory note is a promise to pay, but it’s also a schedule of payments. If you lend money to someone, a promissory note is your proof that they have agreed to repay it.
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