Promissory note an important legal document that is written in favor of one party in order to protect his/her rights. It is an unconditional promise to pay back another person at a specific time. It is considered as legal binding but you cannot call it a contract as there is no condition like traditional contracts. This note legally binds one person to repay a specific amount of money to other individual on a specific date. These are made by banks, financial institutions, landlords or family as well as friends as a legal insurance to payback loaned money. It is usually contains date on which promissory note is written, future payment date, payment terms and conditions, total amount and sign of both parties. It is considered as a safest way to borrow money because with the help of promissory note you will get legal support for the repayment of money.
Reasons to Write Promissory Note
There are lots of reasons for which a promissory note is required and some of these reasons are as under:
- Promissory note is simple used to memorialize an oral agreement between two individual because through this note one individual make promise to payback other individual.
- Promissory note is also written during real estate transactions in order to ensure payment on right time.
- Promissory note is frequently used by self-employed persons who seeks to obtain a mortgage to purchase property but due to some reasons they are unable to qualify for the mortgage. In such situations, the buyer signs a note and the seller holds the mortgage. It is a written promise from buyer to seller for the payment of amount according to terms on right time.
- Promissory notes are also used by different corporations who want to increase the line of credit because it is most secure way to get payment.
- If you want to pay loan to your friend or any relative then use of promissory note will protect your loan as promissory note will legally bind the debtor to repay your full amount on determined time according to terms and conditions.
- Writer of promissory note often consider the financial situation of debtor and set payment terms and conditions according to it, for example if the financial state of debtor is not good then he/she can repay debt in installment.
- Promissory note is typically written while lending money to other person. Through promissory note you can get legal support and insurance to get your money back on specific period of time according to terms and conditions.
Here is download link for this Promissory Note Template,