A Promissory Note is a legally binding document that outlines how much money the lender gave to the borrower and the structure of repayment. Whether you get a mortgage, take out a student loan, car loan, or a personal loan, you need to create a Promissory Note to have evidence of the loan and protect both parties who signed the note from any misunderstandings in the future. This document is not very complicated or long, yet it is enforceable and is usually prepared by family members and friends without the help of a professional lawyer since there is no need to have any legal knowledge to properly draft this legal instrument.
If you are looking for a Promissory Note template, you can download one through the links below. There are two main types of Promissory Notes:
A Master Promissory Note is a document signed as a promise to repay the student loans and related fees and interest to the Department of Education. It must be completed before you can receive any Federal Direct Loan funds to pay for your education. This type of Promissory Note describes how much money you will owe, calculates the interest, and states when the interest is to be charged. It will also provide information about available repayment plans and options to cancel the loans.
Generally, a Master Promissory Note is signed once for various subsidized and unsubsidized loans, because it is valid for up to ten years of education. Unlike a regular Promissory Note, it can be used to borrow many loans over a period of several years.
Follow these steps to compose a Promissory Note form:
Like any other legal instrument, a Promissory Note can be considered invalid and voided. To be legally enforceable, it must have all the essential terms and conditions – the exact loan amount, repayment schedule, signatures of the parties that verify the intent to enter into this transaction. The last part is especially important – the court will consider your Promissory Note invalid if the identity of the borrower is not explicitly verified. If you refer to outdated laws to calculate the interest rate, for instance, it will render your note invalid. Additionally, if you cannot find a note or its certified copy, you cannot prove your case as a lender and collect the money, since this is the only piece of paper that confirms the loan.
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Individuals may use this template when they would like to secure a financial obligation to legally bind a borrower to pay their loan back to a lender.
This template establishes the basic terms of the agreement between a lender and a borrower regarding the money the former has provided the latter with.