Payment notes are also known as notes payable are a type of contract or agreement that comes into existence between two parties when one party receive a loan from another party for a specific period of time with a due date and with a specific amount of interest rate charged on it annually. Payment notes that are based on a period of one year or less are known as short payment notes while those having a period greater than one year are considered long term payment notes. Payment notes can be on periodic bases, it means that a loan has some installments over a particular period of time for which payment notes are created. Though, a periodic payment note is a common type of consumer payment notes however, there are other types of payment notes like a balloon, on demand , late fees are also available that a company, bank, creditor or a person chooses on his convenience.
A payment note is similar to a promissory note and is a legal document that everyone should review carefully before signing off to understand the terms and conditions of a note as well as to ensure protection against any kind of issue.
A Sample Payment Note
$ _________________ Date _________________ State _____________
I Borrower promise to pay to the order of Lender or the holder of this note a sum of $_________ with interest rate applied per annum according to the terms of this note.
The payment should be made on ___ / ____ / 20___ or the borrower will pay the amount of a loan in equal monthly installments within one year or write a specific period of time.
If the payment is not made by the borrower within the specified period of time, then the borrower will have to pay a late fee of $_______.
All payments should be made till due date on the given address:
Signature of the borrower: ________________ Signature of the Lender: ______________
Address and contact information Address and contact information
Guidelines of writing a Payment Note
- At the top of the page, write clearly the name of the note like payment note, promissory note etc.
- Write the amount of the loan in dollars at the left top of the payment note as well as write the date at the right top of the note. The date should be the one on which you have organized the note as this will show the terms of the notes are based from this date.
- Clearly write the terms of the note along with the names of the borrower and lender, the principal amount of the loan and the percent interest rate per annum.
- Mention the mode or style of repayment of the loan such as a periodic payment note in which payments are made in installments each over a specific period, the balloon payment note in which a borrower first pay a particular amount of loan for some months, then the borrower will pay an interest amount on a particular date and then pay off the final payment of the loan etc.
- Of the method of repayment, clearly mention the terms and the name of the method.
- Include terms for defaulter, late fees and sum up the payment note by taking the signatures of both the parties along with their contact information and permanent residential address.