Simple Promissory Note

A simple promissory note is a loan document that shows an agreement between two parties and bounding the lender and the borrower legally. A simple promissory note is based on a number of details of the loan such as the amount of the loan, the names of both the parties, contact information of the parties, applied interest rate and a specific date or due date on which the borrower has to pay back the loan amount to the lender. The purpose of adding a list of information in a simple promissory note is just to ensure that there is no kind of misunderstanding and the promissory note can be used in the court against violated party. Promissory notes can be secured and unsecured. Like other loans, a secured promissory note is the one having any collateral as a security like property or gold before getting money from the lender. On the other hand an unsecured promissory note is a simple promissory note that is free from any kind of collateral and is usually based on small amounts. The parties of the simple promissory note are mostly friends or family members. A simple promissory note is always used for the protection of two parties creating a legal binding to both of the parties.

A Sample Promissory note

__________________   ___________________________      _______________

City                                            State                                                 Date

                                (Borrower)          agrees and promises to pay to                        (Lender)       the sum of ($                     )   Dollars for value received, with interest at the annual rate of     12 etc           % payable after          (Date)           .

If this note is in default and is placed for collection,       (Borrower)            shall pay all reasonable costs of collection and attorneys’ fees.

____________________________ Permanent address _________________________________

(Borrower’s signature)       (Date)

____________________________ Permanent address_________________________________

(Lender’s signature)            (Date)


(Signature of the Witness)


Guidelines to write a simple promissory note

Simple promissory notes have a key importance in our daily life and therefore everyone should have an understanding of writing such promissory notes in order to minimize the risk of getting frauds. Usually, promissory notes are written by attorney or bank however in some cases individuals can also write a promissory note. The following steps will help you in writing a promissory note.

  • On the top of the sheet, provide information like city and state and date showing that where and when the promissory note was made. All these three things have separate places making it clearer and reducing the chances of misunderstanding.
  • Include the names of both the parties with their addresses, that is usually written in a way that “I (the borrower residing at) agrees to pay a sum of (the loan amount in dollars) to the lender residing at on the date with an annual interest rate of percent (interest amount).
  • Clearly state the terms of the loan and payment if any. It is also important to list the amount of the loan that is paid by the lender along with a date and witness. Usually, promissory notes are created on the same day on which lender pays the amount to the borrower.
  • At the end of the promissory note, sign the note by lender, Brower and the witness with their permanent address and date.

Related Notes

  • Unsecured Promissory Note As the name implies an unsecured promissory note is a promissory note in which a borrower doesn't have to put something that is equal to the value of the loan amount as collateral such as car, house or any other type of property. An unsecured promissory note has also a legal value and one party can sue the other party in court in case of violation of the terms.  Unsecured promissory notes, like simple and personal promissory notes are common for loans in which the parties, the lender […]
  • Secured Promissory Note Sample This type of note is a written document that is backed by a property as a collateral or security for the loan amount. In a secured promissory note, it is stated that if the borrower is failing to repay the loan amount on the due date, the lender will then take your property. There are many lenders who never pay the loan amount without any security and is usually used in commercial or real estate loans. Secured promissory a bit stressing on the part of the borrower because if due to […]
  • Demand Promissory Note A demand note is a type of promissory note or loan note without any specified time for the repayment of the loan and is held by the lender that he can use it any time and call the borrower for the repayment of a loan.  These notes are provided by the lender in a flexible manner and usually based on a long term in which the lender never asks for the repayment of the loan to borrower unless he needs his money. When the demand notes are created by the loan parties, there is no kind of […]
  • Personal Promissory Note 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 […]
  • Payment Promissory Note 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 […]