A promissory note is a legally binding document that spells the lending requirements in which the borrower agree to pay back the loan. You can create a promissory note for various types of lending situations. Usually, it is by someone who wants to lend a small sum of money to another. The note will act as a simple note that you agree to pay back the loan. It acts evidence in case the other party is not providing any collateral for the loan.
If the borrower did not meet the lending terms, the lender has the power to repossess the property of the borrower with the promissory note as evidence. For an unsecured promissory note, the lender can also use the note to seek compensation from the court if the borrower default on a loan. This can result in the loan being pursued via a debt collection agency.
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Should You Draw Your Own Promissory Note?
There is no need to hire an attorney to draft a promissory note because you can draft it yourself. You also don’t have to fulfil any minimum word count when drafting the note. However, the document must be titled as Promissory Note and it must include the lending term such as loan sum, loan period, and the lender/borrower personal information.
You must be knowledgeable about the lending regulations in your state and be fluent in English if you want to write your own promissory note. If you are a newbie in this area, it is best that you don’t craft your own promissory note. If you make mistake, it will be difficult for you to collect any payment from the borrower in the event that he decides to stop making payment.
Hire an Attorney to Draw the Promissory Note Template
You may have the idea coming across your head that you can use the ready promissory note template that you’ve downloaded online. However, one thing to keep in mind when you are using the downloaded template is that many of these free templates contain error information. This means that it will be useless even if you and the other party put down the signature.
If you can afford it, you should hire an attorney to craft the promissory note. The attorney will write the promissory note based on the state laws. In every state, there are different usury laws that determine the maximum interest charges you can charge on your loan. There are also laws in the IRS department regarding promissory note which you have to take into account when crafting the promissory note. For example, the IRS may be obliged that a lender pays tax if a loan that is below a specific amount.
Download a Ready Promissory Note Template
If you cannot hire an attorney, you will want to consider using the promissory note template from a PDF Editor. To be on the safe side, you should use a ready template from a PDF editor software that you purchase. PDF software is where you can find free promissory note template because such documents are always shared in PDF form.
In Movavi PDF Editor, you can find a free template that includes all the essential elements of a promissory note. The fillable form includes fields for the information of the payer, payee, date, amount, interest rate, first payment due date, a date the loan ends, and penalties terms. The payer is the borrower who is responsible for paying the debt. The payee is the lender who lends the money to the borrower. Get more details at pdf.movavi.com/promissory-note.html.
Most notes do not include information about the prepayment penalties term. However, some lenders decide to include them because they want to receive a certain amount of profit back in case the borrower pay back the loan early. The prepayment sum is the same as the sum of the interest charges of 6 months. The digital form is fillable when you click your cursor in the field. You can press the save button to save all the information you’ve entered into the promissory note form.
You have the option of including a digital signature in the form. In the software, you can move pictures by dragging them. Therefore, if you load a digital signature image, you can move it to the signature field in the promissory note form. However, to do this, you must click the Edit Object mode button on the top right.
You also have to first press the copy button to copy the digital signature image and then press the paste button when you want to paste it into the field. A promissory note is not recorded so you must keep a copy of it for the record your own self. If you lose this note, you will lose the proof to get back payment from your borrower.