personal loan letter between friends notarized

Amount of Loan: The principal amount being borrowed.Date of Issue: The date when the promissory note is written.Spell out all relevant details, and do not leave anything out, including: By laying out all the information in the contract, you ensure that there are no loopholes that could cause problems later. Step 1 – Include All Relevant InformationĪny time you want to craft a legal contract, it’s important to ensure that the document contains all the essential details. You want to create a document that lays out expectations on both sides and provides protection to both the borrower and lender.

When writing a comprehensive and legally binding promissory note for personal loans, make sure you are clear and specific in all of your terms and conditions.

► READ MORE: Lending Money to Family and Friends: Should You Do It? How to Write a Personal Loan Promissory Note Using a promissory note not only offers you legal recourse if your friend or family member does not pay, but it also lays out more specific terms than a handshake agreement, which means that both of you have a better idea of when the loan will be taken care of. You might choose to issue a personal loan at a lower interest rate than the bank. Suppose, for example, that you have a friend or family member who needs a personal loan to help during a hard time. While the lender can seek legal assistance if the borrower fails to pay back the funds promptly, the borrower can insist that the lender adhere to the terms of the promissory note, including not seeking repayment before the time laid out in the document. Having a promissory note also protects both parties’ legal interests as they move forward with the loan process. It may spell out specific consequences if the buyer defaults on the loan or any collateral used to secure the loan. They detail the terms of a loan so that neither party has any questions about it, including the repayment schedule and terms.įurthermore, a promissory note secures the lender’s interests by legalizing the terms of the loan. Promissory notes are pivotal in personal loan agreements. ► READ MORE: Types of Promissory Notes How Promissory Notes Work With a promissory note in hand, both borrower and lender know exactly what to expect from the process, which means that repayment will often go much more smoothly. It formalizes a borrower’s promise to repay a loan and the conditions under which the borrower makes or must issue that repayment. Understanding Promissory NotesĪ promissory note is a legal document that lays out the terms of a loan. With a promissory note, the terms of the loan are documented, which means that both parties know exactly what to expect when it comes to repayment, interest, and any other concerns that may arise.īefore you use a promissory note for a personal loan, make sure you understand the potential legal implications and how the loan may impact you. Promissory notes serve as binding legal agreements between lenders and borrowers, making them an ideal vehicle to lend money for personal reasons.

Personal loan letter between friends notarized