Free Promissory Note Template
Do you need a Free Promissory Note?
Let’s say for an example that you want to borrow $10,000 from your rich Uncle. He’s a generous guy, and after the initial shock wears off agrees to loan you the money. But before any money changes hands, your uncle wants the specific repayment terms spelled out in writing and signed by both parties in order to protect himself. He trusts you, sure, but legally he needs more than that. This document would be considered a promissory note and is legally binding. No matter where you go or what you do with the money, your Uncle can always prove the existence of the original loan in case you “foget”.
A promissory note, often shortened to ‘note’, should provide specific details on the amount of the original loan, known as the principal, the repayment schedule and any applicable interest rate. It is not unusual for a promissory note also to contain details such as grace periods or penalties for defaulting. Although either party may draw up a promissory note, it’s usually in the best interest of the lender to make sure all of the important elements are included. Once both parties sign a promissory note, the precise terms of that contract are the ones which will be enforced during any future legal proceedings.
When you are in the business of lending money, such as maybe running some ordinary business, you will need to have a promissory note that both you and the borrower can sign to provide legal proof of the fact that the loan exists. Unless you already have your own documents that you can use, you may want to consider downloading a free promissory note template from one of the many sites that offer them online. Once filled out properly this note will become a legally binding document that can be used to collect on the debt should the borrower default on their loan. All you need are the signatures of the parties involved.
When you go looking for a template you will need to find one that covers everything including who is lending the money, who is borrowing the money and their respective contact information. It should also state exactly how much money is being borrowed and the interest rate that is being charged. There needs to be a place to list when the first payment is due, and when the last one will be paid. You should also list who the payments are to made out to in case you have a financing department is listed as a separate company.
Your promissory note must explain what actions will be taken if the borrower is late on a payment including the amount of any late fees you are going to charge. Should the person end up defaulting on their loan, you need to be very specific as to what actions you are going to take and who is going to be responsible for the costs of these actions. You may even want to consider what will happen if the borrower should die during the term of the loan. While there may be a plethora of different promissory notes they can be easily broken down into two basic formats, secured and unsecured. If the note is secured by collateral such as real property you must stipulate what will be done with this property in the event of a default.
Promissory Note Template <<< Download here
If you have never used this type of contractual form you will find there are dozens of sites online that offer a free promissory note template that you can download and use. One word of caution however, check with your local authorities to make sure the template you plan to use meets with all of the legal requirements of your state. This way if you have to take a client to court for your money, the courts will be on your side. Cover yourself so you don’t lose your rights!
What Is A Promissory Note