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Promissory Note Template: For Legally Ensuring Repayment of a Loan
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Are you planning to sell a large item of some kind—a car, boat, equipment, etc.—for which the person who intends to buy it will need to pay you in installments? Are you considering lending cash or another source of income to someone and would look like some assurance that the money will be paid back in full? Regardless of whether you are selling an item on credit or lending someone money, you should always secure the transaction with a written promise to repay the loan—one that is legally binding and will stand up in a court of law. This is called a promissory note, and if you fail to create this document before turning that item or cash over to the borrower you may have no legal recourse should the individual decide to default on your agreement. Fortunately, creating one of these documents is very easy using a promissory note template, and there are basically two ways to obtain these preformatted documents. In this article we will explain how to get your hands on a blank promissory template, and show you the items of information that must always be included on this very important document.
Promissory Note Template: Where to Find One
Before we discuss exactly what a promissory note is and what should be included, let’s first take a look at how to obtain a promissory note template. If you decide to make your own promissory note template, Word, Microsoft’s word processing program, can be a very helpful tool, one that can show you step-by-step the pieces of information you must include and the proper format for constructing the promissory note template Word document.
If this sounds like too much work or too confusing, the other available option is to search the Internet and its vast collection of free promissory note templates until you find a sample promissory note template that will suffice for your particular situation.
Either of these two options is perfectly acceptable, but before presenting this document to be signed you should always have it looked over by an attorney to ensure you have included all of the necessary information required for the document to be legally binding in a court of law.
Promissory Note Template: What Is It and What Should Be Included?
A promissory note template is simply a preformatted document for creating a promissory note, one that can be slightly altered for your unique purpose. A promissory note, like the name implies, is a written promise to pay a financial obligation. It is similar to a credit agreement, one that is used when buying a car, home or other expensive item, but not quite as wordy and formal. In fact, when searching for a sample promissory note template or blank promissory note template you will usually find that the document is not much longer than a single page, but is equally enforceable should an individual default on the loan.
Whether you decide to create your own promissory note template Word document, or choose a sample promissory note template from the hundreds of available free promissory note templates online, you will need to include certain information in order to make the document a legal one. This information includes:
• Borrowers Name and Address. The name of the person who is borrowing the money, along with his or her full address and telephone number (s) should be listed near the top of your blank promissory note template.
• Lender’s Name. As the lender you will also need to include your full name and address, along with a number of where you can be reached.
• Principal amount. The “principal amount” portion of the sample promissory note template is the total amount that needs to be repaid, however, if you decide to charge interest on that principal, the amount you will ultimately be paid may be much greater.
• Interest Rate. While most free promissory note templates will include a space to indicate the rate of interest that will be charged on any unpaid balance, if the sample promissory note template you locate does not, it can always be added later.
• Number of Installments. In this section you will list the total agreed upon number of weekly or monthly installments.
• Amount of Each Installment. This is total dollar amount that will be paid for each of the above-mentioned installments.
• Installment Dates. This portion of the sample promissory note template is similar to a rental agreement, listing the day or date that each installment is due: for example, every Friday or the 3rd of each month. If the principal amount will be paid in one lump sum you can include that date in lieu of the installment dates.
In the final portion of the promissory note template you will need to include the legal steps that will be taken should the borrower default on the loan. And finally, your blank promissory note template should conclude with signature spaces for the borrower, lender and a witness, along with a space for a Public Notary’s signature and stamp.
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