When you make a monetary loan, it is always a good idea to have a promissory note setting forth the terms of the loan. A promissory note is also used in real estate transactions.
A personal promissory note for a loan has many parts. It will set forth the full names and addresses of both the lender and the borrower. The amount of the loan will be stated, along with any terms of interest and the length of the loan. Payment terms will give the amount of each month/weekly/yearly payment until the loan is considered paid in full. The promissory note will also spell out remedies and actions should the loan be defaulted upon or if payments are late. Without this type of formal agreement, there is no guarantee that loaned money will be repaid to you on time, or even at all. Promissory notes protect everyone involved. They not only assure the lender a legal recourse if the loan is defaulted upon, but they protect the borrower should the lender decide to change or alter verbal terms throughout the life of the loan. Once this form is completed and endorsed, there should be no questions, confusion and difficulty with the performance of either party. Lastly, as with any other legal forms, all signatures must be notarized and/or witnessed.