If you want to take out a loan, and want or need to provide your lender with a guarantee of payment, then you may wish to make use of a Promissory note. These are also known as IOUs, and it is a document that is provided by the borrower to the lender, agreeing to the repayment. A promissory document is given when a loan agreement is not available, and differs significantly from the latter. If you are considering giving your lender such a note, then you need to understand exactly how it can affect you, and where you can find the documentation required to make this note legal.
Difference Between Promissory and Loan Agreements
When you sign a loan agreement, you are entering into a binding arrangement which not only affects yourself, but also has binding implications to the lender. The lender signs the loan agreement in addition to the borrower, and they are both obliged to abide by the limitations of that loan. With a promissory however, the lender does not sign, and it is only binding to one party. The borrower who chooses to sign this note is obliged to repay the loan or face consequences, but there are no obligations to the lender. You may use a promissory when other types of loan agreement are not suitable, or you cannot take out the formal loan.
Who Uses A Promissory?
There are several circumstances in which a promissory document may be a better alternative. The note may be used between family members, or even between small businesses, where a more formal loan agreement may not be suitable. In addition, students will often sign these types of notes when they take out their first loan on attending college, and they may also be used where a more informal loan is being set up, but the borrower wishes to make use of a formal notice of the amount borrowed.
Obtaining the Documents
Before you put any agreement to repay a loan down in writing, it is important that you obtain the correct paperwork. Finding a promissory note online is easy if you use their helpful online forms. Once we know your state, we can give you the correct form to provide a fast and legal service. To contact them today about your loan note, contact US Legal Forms.com now by calling 1-877-389-0141 on their toll free number.