A promissory note includes a schedule repayment and a plan for making the payments, according to Expert Law. It identifies all parties to the loan, the amount of the loan, any interest, and any additional clauses the parties wish to add to the document.Continue Reading
When drafting a promissory note, the parties involved should be sure that the note considers all relevant state laws, such as the maximum interest rate, states Expert Law.
Sometimes one party may wish to secure the promissory note with a lien or mortgage against real estate or titled property of the borrowing party in the event that the borrower is unable to repay the debt. The parties may include this in the promissory note, explains Expert Law.
Making sure that any interest on the loan is legal is very important. If the interest on a loan is higher than allowed by the state, then any interest requirement may be unenforceable. If the interest is particularly high, the lender may be subject to criminal charges, reports Expert Law. Bank and credit card loans may have different maximum rates than personal loans allow. Any late fees in the promissory note are also subject to these types of laws.Learn more about Personal Loans