Promissory Note
A Promissory note is a legal instrument of finance where a first party known as the “payer” makes a commitment in the form of a written legal document to make a payment to a second party known as the “payee.” The note can be payed in the form of a fixed time declared by nature or at the demand of the second party. The payment over time may be set under an interest of a certain amount per annum. All the specifications of this note shall be determined under a certain set of terms and conditions that are agreed upon. Whenever this Promissory Note is easily fit to be sold and does not have any conditions, then it is also considered to be a negotiable instrument (A document guaranteeing the payment of a specific amount of money within a certain amount of time with the payer’s name written on the document.)
It is also considered to be a note payable in accountancy. A bank note may be an example and is mostly seen as a promissory note. It is a note that may be cashed in by the bearer at anytime usually at his/her demand. The note is important as it is the mode of payment of the buyer to the seller.
A Promissory note is made fully knowing that a payment has to be made at a future date set within the agreement and is subject to a terms and conditions of payment.
Promissory Note
__________________, 20_____ _____________, ____________
$_______. ___________________________, referred to herein as “MAKER”, agrees to pay to the Order of _______________________, referred to herein as “HOLDER”, or order, the sum of $____, (______________________________&___/100 Dollars), at __________________, _______________, _____________, with interest thereon at rate of ___% per annum, simple interest.
Said note shall be in due, unless earlier accelerated, in ______ installments, payable every _______, in the amount of $_____. 00 (____________________&__/100 Dollars). All payments received shall be credited first to interest and then to principal. Should MAKER fail to pay any installment when due, then HOLDER shall have the option to accelerate the payment of the full principal sum and accrued interest payable. HOLDER shall have the right for commercially reasonable causes, including but not limited to, the institution of litigation, the filing of tax liens, or any other objective sign of incapacity of the MAKER to pay the principal or interest due, to accelerate the payment of the full principal sum and accrued interest payable.
This note is payable in U.S. Dollars. At any time the maximum rate of interest applicable to this transaction shall not exceed the legal maximum rate of interest for a note of this type. Any sums paid in excess of any lawful limitation shall be applied to principal.
After default herein, this note will bear interest at the highest legal rate for this type of note until paid in full. Upon any default, MAKER agrees to pay a reasonable attorney’s fee for any and all services of an attorney, whether in or out of court, and for appeal and post-judgment collection legal services.
Dated:____________________________________________
MAKERPERSONAL GUARANTEE
The undersigned, in consideration of the extension of credit by HOLDER to MAKER, unconditionally personally guarantee the full and prompt payment of principal, interest, and any collection costs, including attorney’s fees to HOLDER. The undersigned consent to any extensions which may be made from time to time between MAKER and HOLDER, and consents to the release or substitution of any collateral.
***************************************************************
READ CAREFULLY: You are executing a legally binding obligation to pay this debt should the primary maker fail or refuse to do so. This may mean that you might be called on to pay this debt and collection costs.
***************************************************************
__________________________________________
GUARANTOR__________________________________________
GUARANTORPromissory Note
Review ListThis review list is provided to inform you about this document in question and assist you in its preparation. This is a straightforward promissory note. Be guided accordingly.
1. Make multiple copies. Give one to each related party.
Frequently Asked Questions
What is a promissory note?
A promissory note is a written promise by one party, called the MAKER, to pay a specific sum of money to another party, called the HOLDER, or to their order. It includes the principal amount, interest rate, payment schedule, and terms for acceleration. The note is a legally binding document that outlines the borrower's obligation to repay the loan.
Who is the maker and who is the holder in a promissory note?
The MAKER is the party who agrees to pay the sum of money, essentially the borrower. The HOLDER is the party to whom the payment is made, essentially the lender or the one entitled to receive payment. These terms are explicitly defined in the promissory note.
What does it mean to accelerate a promissory note?
Acceleration means that the HOLDER can demand the full unpaid principal sum and accrued interest to be paid immediately, rather than waiting for the scheduled installments. This option arises if the MAKER fails to pay any installment when due. Acceleration can also occur for commercially reasonable causes, such as litigation, tax liens, or other signs of incapacity to pay.
How is interest calculated on a promissory note?
Interest is calculated at a simple interest rate specified in the note, expressed as a percentage per annum. All payments received are credited first to interest and then to principal. This means that any payment made is applied to the interest owed before reducing the principal balance.
What happens if I miss a payment on a promissory note?
If the MAKER fails to pay any installment when due, the HOLDER has the option to accelerate the payment of the full principal sum and accrued interest. This means the entire remaining balance may become immediately due. The HOLDER may also accelerate for other commercially reasonable causes, such as litigation or tax liens.
What are the payment terms in a promissory note?
The note specifies the number of installments, the frequency of payments (e.g., every month), and the amount of each installment. Payments are due as stated, and the note may be payable in full unless earlier accelerated. The exact terms are filled in on the note.
Can a promissory note be transferred to someone else?
The note is payable to the Order of the HOLDER or order, which means it can be transferred or assigned to another party. The HOLDER may endorse the note to a new holder, who then has the right to receive payment. This makes the note a negotiable instrument.
What is the difference between principal and interest in a promissory note?
The principal is the original sum of money borrowed, while interest is the cost of borrowing that money, calculated at a specified rate per annum. Payments are applied first to interest and then to principal. This means that the principal balance decreases only after interest for the period is paid.
What are commercially reasonable causes for acceleration?
Commercially reasonable causes include but are not limited to the institution of litigation, the filing of tax liens, or any other objective sign of the MAKER's incapacity to pay the principal or interest due. These events allow the HOLDER to accelerate the note. The note does not provide an exhaustive list, but these are examples.
Is a promissory note legally binding?
Yes, a promissory note is a legally binding contract between the MAKER and the HOLDER. It outlines the terms of repayment, including the amount, interest, and consequences of default. Both parties are obligated to adhere to the terms as written.
Beautifully done. Im printing it know.
This is stunning!
Awesome. Well done sir.
So beautiful template
Wonderful work. I love the way you created the template its well written said my lawyer.
It’s what i have been looking for this pass few days. Im glad i’ve visited your site.
Me gusta.I really need this one since im not that good in writing english.
OH MY GOD!! I WANT THIS Printable Form . Just what im looking for.
holy crap this is awesome!!! I don’t need to register or pay any registration just to have one.