Promissory Note Template

A Promissory Note is a written and sworn statement by the debtor or borrower stating that he in fact borrowed money from the mentioned creditor on the mentioned date and he is legally obligated to repay his debt by signing this note. Some people assume that a promissory note and a loan agreement are the same documents but in reality, they are different as loan agreement has more legal value and can be challenged worldwide whereas the promissory note doesn’t serve this purpose in a good manner.

Brief Description of Promissory Note:

Usually when you lend some money or get a loan from a bank or loan firm, you are required to sign a legal contract known as the loan agreement with the creditor so that if you can’t pay back the debt or don’t pay back the debt on time, the creditor can use it for legal purposes. But, in common situations when friends lend money to each other or you borrow some money from your family member or relative, you don’t need to sign a loan agreement but you can also create and sign a promissory note by yourself. This Promissory Note Template state that you borrowed mentioned amount of money from the mentioned creditor and you swear to return the money whenever he demands for it.

Key elements to include in the Promissory Note Template:

  • Name of the debtor or borrower
  • Name of the creditor or lender
  • Date when the debtor borrowed the money
  • Date when the debtor signed the promissory note
  • Details of the loan (i.e. amount)
  • Details of repayment of the loan (i.e. payment schedule, periodic installments and duration to pay back the loan in full)
  • Sworn statement by the debtor that he has borrowed the money from the creditor and he is legally required to pay back his debt
  • Mutually agreed terms and conditions of the note
  • Signature of both parties

Advantages and Disadvantages of Promissory Note:

When we talk about promissory notes, most people think that this is a very convenient way to insure your debt but there are some flaws of this note as well as good benefits for each party. First of all, the most important benefit of promissory note is that it doesn’t require including a third party or any lawyer to draft the note but you can do it by yourself. Second, even if this is drafted by you, either party can use it in court in case of a dispute and this note can serve its legal purpose as the proof the debtor did borrowed money from the creditor and agreed to pay back his debt.

On the other hand, some setbacks of using promissory note include the lesser legal value of this note as compared to loan agreement. Another important thing is that if the debtor decides not to pay you the debt and disappears or moves out of the country, you can’t use the promissory note on international level. Also if you decide to use the promissory note and file a case against the debtor, this can cost you a huge deal of money because of the lower value of the promissory note.

Here is preview of a Free Sample Promissory Note created as fillable PDF Format,

 

Promissory Note Template

Here is download link for this promissory note template,

Download Promissory Note Template

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