 |
 |
 |
Download promissory note form in Microsoft Word format.
Save Time with a Promissory Note Template
The Internet is a tremendous resource for the sharing and borrowing of all types of business and legal documents, and one of these available documents is the promissory note template. Now naturally, not all of these templates are the same, and of course you need to be careful (for legal reasons that is) when selecting one of these templates, but even if you have to have the document looked over initially by your attorney, you can still save some much needed time and effort by going this route instead of creating one from scratch. In this article we will briefly define the purpose of a promissory note, and show you what to look for to ensure the document meets the various legal requirements.
The Promissory Note Defined
If you’ve ever bought a home, automobile, or made some other large purchase in which you agreed to pay over time, chances are you have already been formally introduced to the concept of a promissory note. Now perhaps when you made these purchases the note was called something else, such as a loan agreement or a loan document, but despite what the document was called, the general premise of all them is pretty much the same.
A promissory note is really nothing more than a legally binding document, a signed promise to pay a particular sum of money, whether it’s a debt or a loan, under specific terms and in an agreed upon amount of time. The phrase “specific terms” usually refers to things such as interest and payment due dates, while “agreed upon amount of time” refers to the length of time—in days, weeks, months or years—when the loan needs to be repaid in full.
What to Look for in a Promissory Note Template
The exact language of the promissory note template will depend largely on the type of agreement you are entering into, but usually the document is no more than one page and includes some very specific information. Below are some of the things your template should include:
• Lender’s full name and contact information (this can also be called the company letterhead).
• Borrower’s or debtors name and contact information.
• Principal owed. This is the total amount owed or being borrowed by the debtor before any interest charges or applied.
• Interest rate. Interest rate refers to the amount of interest charged, usually calculated as an annual percentage rate (APR). Also important to note here is that each state has what is called “usury” laws which define the maximum amount of interest which can be charged for any loan. Exceeding these maximum limits may carry civil as well as criminal penalties.
• Terms of repayment. The terms of repayment refers to the exact dollar amount of each payment as well as when each of those payments are due.
• Late Fees. Late fees can be charged by the lender if the terms of the agreement are not honored, however, the dollar amount of the late fee also must not exceed what is reasonable under the law.
• Collateral. If the loan is going to be secured by some type of collateral (a home, car or jewelry) it must be stated clearly in the promissory note.
• Signatures and Date. The promissory note is not considered legal unless it is signed and dated by both borrower and lender, and in some cases, a witness must also sign the document.
At bare minimum, a promissory note template should include all of the above-mentioned items to be legal. If for any reason you have doubts that the document you plan to use does not meet legal requirements it is always a good idea to have the form looked over carefully by an attorney.