Promissory Notes may be more informal than full-blown loan contracts and financing agreements, but they still must be carefully drafted. As an enforceable legal document, attention should be paid to how it is worded.
Use clear and plain English to draft the document, and cover essential information such as the parties' names and when payment will be due.
A successful Promissory Note contains the following details:
- Lender and borrower names
- The loan amount
- A payment plan (one or several installments)
- Whether interest will be paid on the principal
- If collateral will secure the loan
- The consequences in case of payment default
To correctly add this information to your Promissory Note, follow these steps:
- Mention the parties: Provide the full names and complete addresses of the borrower and the lender.
- Include the loan amount: Add the principal sum (amount being loaned) and the interest rate, if applicable.
- Explain payment terms: State the day when the loan amount must be paid back, and if it will be paid in one lump sum or installments.
- Choose a secured or unsecured loan: Select if there will be any collateral and late fees involved.
- Decide to include a co-signer or not: Decide whether there will be any co-signers.
- Mention the Governing Law: Add which state’s laws will govern the Promissory Note.
- Sign the Note: Sign the Promissory Note along with the other party and co-signers or witnesses.
Our promissory note template and step-by-step survey will help you create a legally binding and professional document that looks the part and works effectively.
It will help you identify the key information that must be found within your form for it to be valid and enforceable.
Our Promissory Note template and step-by-step survey will help you create a legally binding and effective professional document.
It will help you identify the key information that must be found within your form to be valid and enforceable.
How to Sign a Promissory Note
Once you have customized your Promissory Note, both parties must sign it. Only then will it be considered legally valid.
Complete the following actions before signing your document:
- Evaluate if you require witnesses: In most cases, it is not a requirement. However, certain jurisdictions demand witnesses or a notary public to be present.
- Fill in the date: Ensure the date is filled in at the moment of signing.
- Sign the document: Both parties must sign the Note and include their printed names.
- Provide copies: All parties should keep copies of the Promissory Note.
Confirm that your Promissory Note complies with state laws and requirements before you sign the document.