A Personal Promissory Note is the one used between two parties like friends and family members on a small level with a small amount of loan. As compared to commercial and other types of business related promissory notes, a personal promissory note is not used by people commonly because people usually feel shy in creating some legal documents for personal loans. There is no need to feel shy or unpleasant because a promissory note is just used to eliminate misunderstanding and is good enough for your good relation. A personal promissory note becomes legally bound if and only if both the parties sign the note. The usages of personal promissory note are quite limited as it is only used for two parties on a small level and small amount of loan but unfortunately is very rarely use because the lender feels shy in making a promissory note as sometime borrower consider the promissory note as an insult that his/her friend or family member has no trust in the browser.
The Personal Promissory Notes are often used by two individuals who know each other and therefore usually they are free from any kind of interest rates. The details of such notes are based on information about the borrower and lender, the total amount of loan, date of the promissory note, the interest rate if any and the date of return of the loan. The purpose of the personal promissory note is just a protection that makes the lender able to sue the borrower in case of any differences regarding the agreement.
A Sample Personal Promissory Note
I ___________ (borrower) agree to repay to____________ (lender) _______________ (amount – spelled out) for lending me said funds for ___________________ (state your purpose for the loan.)
The terms of the Loan:
1.___________________ (Amount you have to pay per month)
2. ___________________ (The interest rate charged by the lender, write zero if there is no interest rate).
3. _________________ (Date when the loan must be fully repaid).
4. ___________________ (what happens if there is a late payment, bounced checks, etc., the fee?)
5. ___________________ (any other terms of the loan you want to add.)
Both the parties agree to the terms stated here. The terms may not be modified without the mutual consent of the parties.
Signed by the County of _________ (borrower’s county) in the state of ______ (borrower’s state) on this _____ (day) day of _______ (month), ______ (year).
your full name and signature
Lender’s name and signature
How to write a personal promissory note
There are a number of templates available on the internet for personal promissory note; however it is good to create a one that suits your requirements.
- Start the personal promissory note with the full name of the borrower you can also mention the residence and contact information, then write your own name as a lender, mention the loan amount and date with complete information like day, month and year.
- Clearly include the terms of the promissory note like payment method, mode, rate of interest, due date and other.
- End the promissory note with the signatures of both parties.