How To Write A Promissory Note For A Personal Loan?
You have to prepare a promissory note, if any of your family member or friend is asking for a personal loan from you, so that you can protect your money. The promissory note serves as the proof of amount provided by the lender. It helps you to sue against your family member or friend, if they default the loan amount. The promissory note can be typewritten which makes it professional, and both the borrower and lender can read the terms of loan easily. Typed promissory notes are always legible and the borrower cannot claim that he/she did not understand the terms associated with the loan.
The personal loan promissory note should contain the date in which the loan is provided, and the date of repayment. By providing the dates, it gives a clear idea about the repayment of the money to the borrower. If the lender did not mention the date for repayment of the loan, then the borrower may not pay the money for many years. You have to mention the names of the lender and borrower in the promissory note to make it more clear, or else the borrower can tell that the amount borrowed is for some other person, or you are not the lender. By including the names in the promissory note, you are clearly indicating that both individuals are involved in the personal loan.
The promissory note should contain the information of repayment method as well as how can it be repaid. If the lender is interested in getting the repayment fully as lump sum amount, it should be mentioned in the promissory note. If you do not have any problem in receiving the loan amount as installments, then mention the rate of interest in the document. A disclaimer has to be included saying that by putting the signature, the borrower is agreeing to the terms written in the promissory note. Both the lender and borrower have to sign on the promissory note before the notary public to make it legal.