If the borrower refuses to pay, the promissory note provides strong evidence if the lender wishes to initiate legal action.
#Salary receipt template word full#
If the borrower is unable to pay back the money on time and defaults on the note, the lender can enforce the promissory note and demand the full amount be paid, or collect on the collateral. Consequences of non-payment (“default” and “collection”) Payments for interest only are made at regular intervals, principal amount due on maturity dateĮntire amount owed, including interest, is paid all at onceĮntire amount owed is due whenever the lender wants his or her money backĮxample: $1,500 monthly payment actually consists of $500 towards the outstanding principal and $1,000 towards the interest with $1,500 due on the maturity dateĮxample: $500 monthly payment is applied only towards interest and full $10,000 loan amount is due on the maturity dateĮxample: $10,000 loan for a friend’s small business is due on a specific dateĮxample: $10,000 loan for a friend's small business is due at any time or whenever financially feasibleĥ. Payments for principal and interest are made at regular intervals If there is no date or if the date has already passed, it is “payable on demand” or “due on demand.” For all of the repayment options, refer to the table below. For instance, depending on how the promissory note is structured, the borrower must pay back the lender by a certain date (known as a “maturity date”). The promissory note should clearly spell out how the money will be paid back to the lender. Payments on the note are usually applied first toward the interest with the remainder applied toward the principal amount.Īn example of the “Principal” and “Interest” sections 4. Make sure you check the interest requirements in your state before drafting your loan notes. In comparison, Florida promissory notes can incur an interest rate of 18% (for amounts less than $500,000), or 45% (for loans greater than $500,000). Note: the majority of states have usury laws that restrict the interest rate you can charge.įor example, in California and Texas, a promissory note’s interest rate cannot exceed 10%. You can use any of their promissory note amortization calculators to calculate the principal and interest payments on a monthly basis for the lifetime of the loan. If you’re unsure what interest rate to charge, visit the Wells Fargo Rate and Payment Calculator, Prosper Loans, or the Lending Club for a comparison of current interest rates for personal loans. You also need to decide whether or not to charge interest, and how often it will be compounded (monthly or yearly). Repayment amount (“principal” and “interest”)Īll promissory notes, no matter how simple, should clearly state the amount of money being borrowed (the “principal” amount) that needs to be paid back. The borrower may also be called a “payer” or “buyer”.Īn example of “the Borrower” and “the Lender” section 2.The lender may also be called a “payee”, “seller”, “issuer”, or “maker”.Only the borrower must sign the promissory note, but it’s good practice to also include the lender’s signature. Full names of parties (“borrower” and “lender”)Ī standard promissory note should name who is receiving money or a line of credit (the “borrower”) and who will be repaid (the “lender”).
#Salary receipt template word how to#
How to Write a Promissory NoteĪ legal promissory note should contain the following details and clauses: 1. In general, you should use a promissory note for more straightforward loans with basic repayment structures, and a loan agreement for more complex loans. Bank, commercial, business, or investment loans.Real estate loans, property down payments, or mortgages.Personal loans between family members, friends, and colleagues.There are many types of promissory notes that can be used for several purposes, such as: If you’re borrowing or lending money, you should create a promissory note that addresses payment details, interest rates, collateral, and late fees. The note records information about how much was lent (the principal amount), interest rates, when the payment is due (maturity date), when and where it was issued, and signatures.Ī promissory note is also referred to as a: (855) 335-9779 Monday-Friday, 9AM - 7PM EDTĪ promissory note is a written and enforceable agreement in which a borrower promises to pay a lender a sum of money on demand, or within a specified period of time.
0 kommentar(er)
