A promissory note is a type of negotiable instrument issued by a bank (or any business) to a customer. A promissory note may have interest rates associated with it, similar to a credit card. What exactly is a promissory note and what is its importance? How does it work? Read on and find out!
What is the Promissory Note?
A promissory note is basically a written promise to pay money or do something else at some point in time. You can easily find a free promissory note template in Indiana now at any of the websites where the templates of legal forms and documents are available free of cost for you to download and customize for your own specific use.
One example of a promissory note would be a loan agreement between an employee and his employer. The employee promises to repay the loan, and the employer agrees to give the employee the money.
Another example would be if a business owner sells items online, he might issue a promissory note to customer who wants to buy those goods. If the customer does not pay back the money before the agreed upon date, then the company owner could sue the person.
If a person buys something using a promissory note, he or she is giving a guarantee. In this case, the buyer promises to pay the full amount to seller after a specific period of time, in exchange for the item or service. However, if the buyer fails to pay the seller, then the seller could sue the buyer. The promissory note could be used in a court of law as evidence.
You can get a free promissory note online and check out how the template looks like.
With these kinds of notes, a promisor (on the person who makes the promise to pay) acknowledges the debt owed to another party, usually an endorser. As a lender, you can offer or receive interest on your loans while they are outstanding and should include this as part of your document listing these debts under other statements such “Interest rate”, for example “interest payable at $5 per month”. Sureties are sent in the form of promissory notes – that allow an individual to make outstanding commitments.
A promisor often offers a lender an option to specify the amount of time given from the date of payment. Keep in mind that this type of a document is legally binding and gives a guarantee of repayment once the specified amount of time comes to an end.
A Promissory Note is a document which states that the promisor is issuing it in good faith and is making a commitment to abide by the terms of the note. The person to whom it is issued can keep it safely somewhere, to demand repayment when the time comes or to use as evidence in a court of law, if the promisor denies making any promise to make any payment after the stipulated period of time.