Promissory Note Generator

About Promissory Notes

A promissory note is a legal instrument where the borrower (maker) promises in writing to pay a specified sum to the lender (payee) under defined terms. It documents the loan agreement and creates a legally enforceable obligation.

Secured vs. Unsecured Notes:

A secured promissory note is backed by collateral - an asset that the lender can take if the borrower defaults. Common collateral includes vehicles, equipment, real estate, or other valuable property. This reduces the lender's risk.

An unsecured promissory note has no collateral backing. The lender relies solely on the borrower's promise to repay. These typically carry higher interest rates due to increased lender risk.

Key provisions in this template:

1. Amount: Borrower agrees to pay Lender the principal amount together with interest payable on the unpaid principal at the specified annual rate.

2. Prepayment: The Borrower may pay the outstanding balance without premium or penalty at any time.

3. Default & Acceleration: If payment is not made within the grace period, the lender may declare the entire note immediately due and payable.

4. Security (if secured): The borrower grants a security interest in the collateral until the note is paid in full. The lender has repossession rights upon default.

5. Expenses: In the event of default, the borrower agrees to pay reasonable attorneys' fees and collection expenses.