A promissory note is a traditional signed legal document outlining a loan’s repayment schedule – its formal tone will set loan expectations, as well as encourage borrowers to successfully repay loans. It is the only legal document absolutely necessary to formalize a loan.
There are some key issues that should be considered when discussing the terms of your loan. The promissory note should include, in detail:
1. The names of the borrower and lender
2. Payment frequency and timeframe
3. Amount per payment
4. Interest Rate
5. Consequences of missed or late payments
6. Offered Collateral