How To Write A Promissory Note

Jump to Section

Need help with a Promissory Note?

Post Project Now

What Is a Written Promissory Note?

A promissory note, or a note payable, is a legally binding document used by the borrower when loaning money to make a promise of repayment to the lender. The promise of repayment is typically during a fixed time or date or on demand.

In general, promissory notes are used to govern the transaction between a lender and a borrower. They set the terms and conditions of the transaction.

Types of Promissory Notes

The types of promissory notes often reflect the type of loans that they are written for. Some common types of promissory notes are discussed below:

  • Simple Promissory Note: A simple promissory note is a written guarantee that money borrowed will be returned to the lender in an agreed-upon way. It does not detail the purpose of the loan.
  • Student Loan Promissory Note: A student loan promissory note, or a master promissory note from the government, is an agreement that a borrower will repay their student loans with the interest charged. Most student loan promissory notes are between a borrower and the government but students may also create promissory notes with their parents or relatives who provide funding for their education.
  • Real Estate Promissory Note: In a real estate promissory note, the borrower uses their property as collateral. If the borrower defaults, the lender can place a lien on the collateral. This makes the information public record and impacts the borrower’s credit.
  • Personal Loan Promissory Notes: A personal promissory note is used to record a loan between friends or family members.
  • Car Promissory Note: A car promissory note is used during the sale or exchange of a car. It creates an agreement that the borrower will make payments to the lender in exchange for a car. Other vehicles also follow the same process of producing a vehicle promissory note to record loans.
  • Commercial Promissory note: A commercial promissory note is used when money is borrowed from a commercial lender such as a bank or loan agency. If the borrower defaults or is unable to make timely payments, the lender can demand full payment of the loan with interest. The lender is also entitled to place a lien on assets owned by the borrower till the lender has received all repayments.
  • Investment Promissory Note: An investment promissory note, often used in place of a business loan, is used to raise capital for businesses. They ensure that the investor receives a return on their investment over a given period of time. This reduces the risk of investing in a business. If the borrower fails to pay, the investor is entitled to take ownership of the company.

Promissory notes can also differ based on the type of payment they use:

  • Installment Payment: An installment payment promissory note is generally used when purchasing expensive items. Payments are sent in installments or divided up in batches.
  • Installment Payments with a Final Balloon Payment: These are used mostly in mortgage loans. The borrower pays small installments before paying a large sum of repayment back in one go.
  • Due on a Specific Date : Due on a specific date (DOSD) promissory notes require the repayment of a loan or debt before a certain date
  • Due on Demand or Default: A due on demand or default promissory note is a pay when you can type of note mostly used between family and friends for small loans.

Here is more on types of promissory notes.

Meet some lawyers on our platform

Donya G.

31 projects on CC
View Profile

Melissa G.

1 project on CC
View Profile

Richard N.

32 projects on CC
View Profile

Briana C.

5 projects on CC
View Profile

How To Write a Promissory Note – Step by Step

You can write your own promissory note by following some easy steps below:

  • Date : You should include the date on which the promissory note was created at the top of the page.
  • Amount : Always include the amount of money being borrowed. This avoids any future disagreement and alteration.
  • Loan terms : The note should also include the terms of the loan. The loan terms explain how the loan will be paid back, when and the method of repayment. It includes specific dates and timelines.
  • Interest rate . You should mention the rate of interest on the loan. This section should mention if the loan is fixed or variable.
  • Loans are often backed by a collateral in case the borrower defaults. A collateral provides security for the lender. Often providing a collateral lowers the interest rate on loans. These are known as secured loans. If the loan is secured by collateral, the promissory note should provide details about the collateral and its value.
  • Default terms: The promissory note should also mention the terms of default.
  • Lender and borrower information. This section covers the information about all parties involved in a loan. It describes the lender and the borrower along with their addresses and contact information.
  • Signatures : All parties must sign the note for it to be legally enforceable. Generally promissory notes only need to be signed by the borrower that is making the promise.
  • Release of Promissory Note : Once the loan is paid back, the commitment of the parties in the promissory note can also be brought to an end. For this you will need to issue the release of the promissory note.

Here is more on elements of promissory notes.

How Do Promissory Notes Work?

A promissory note is a promise to pay back a loan but is different from a loan agreement or mortgage note . While all three record a loan, the loan agreement provides a more detailed account of the loan transaction. A loan agreement contains important information and clauses dictating repayments, disputes, etc. Both the lender and the borrower need to sign the loan agreement. A promissory note is simply a formal promise that the borrower will repay the loan. It only needs to be signed by the borrower.

Examples of When To Use a Promissory Note

A promissory note can be used in the following events:

  • Student Loans: If you are borrowing money for educational purposes, you can use a student loan promissory note to signify that you will be repaying your student loans.
  • Car Loans : If you are buying a vehicle, such as a car, you can use a car promissory note to ensure the lender that you will be paying back the car loan under the set terms.
  • Business Loans: If you are borrowing money to invest in your business or to start a business, you can use a business promissory note to ensure the lender that you will be paying back the loan under the set terms and timeline.
  • Personal Loans : If you are borrowing money from family and friends, you can use a personal promissory note to promise repayment under set terms.

Get Help with a Promissory Note

Do you need help with a promissory note? Post a project in ContractsCounsel’s marketplace to receive free bids from lawyers for the work. All lawyers are vetted by our team and peer reviewed by our customers for you to explore before hiring.

How ContractsCounsel Works
Hiring a lawyer on ContractsCounsel is easy, transparent and affordable.
1. Post a Free Project
Complete our 4-step process to provide info on what you need done.
2. Get Bids to Review
Receive flat-fee bids from lawyers in our marketplace to compare.
3. Start Your Project
Securely pay to start working with the lawyer you select.

Meet some of our Lawyers

ContractsCounsel verified
Managing Member
38 years practicing
Free Consultation

I have been practicing law for 35 years. In addition to my law degree, I hold an MBA. I've created six companies, currently act as outside counsel to another 12, and have been an advisor to more than 500 startups and entrepreneurs.

ContractsCounsel verified
Business Contract Attorney & Arbitrator
21 years practicing
Free Consultation

I am a licensed and active Business Attorney, with over 20 years of diverse legal and business experience. I specialize in contract review, drafting, negotiations, ecommerce business transactions, breach of contract issues, contract dispute and arbitration. I am licensed to practice in New York and Connecticut. I am a FINRA and NCDS Arbitrator. My experience includes serving as General Counsel to small businesses. I negotiate, draft and review a wide array of commercial contracts; provide business strategy and employment advice and assist in the sale of businesses entities. I work extensively with various kinds of contracts. In reviewing agreements, I conduct risk analysis of contract and interpret the terms and conditions so that clients understand exactly what their obligations are under the agreement and are protected as much as the law requires. I am detailed and thorough in my review and drafting of agreements. Additionally, I advise clients on how to limit their liability and lower their contractual risk. I specialize in breach of contract issues and arbitration. I have been a Hearing Officer, presiding over cases and rendering written decisions; a Civil Court Arbitrator presiding over cases in contract law, commercial law, etc., a Judicial Clerk in Civil Court; a Vice President at an Investment Bank and an Attorney at top AML law firms.

ContractsCounsel verified
Attorney-at-law and Certified Public Accountant
25 years practicing
Free Consultation

Carlos Colón-Machargo is a fully bilingual (English-Spanish) attorney-at-law and Certified Public Accountant (CPA) with over twenty years of experience. His major areas of practice include labor and employment law; business law; corporate, contract and tax law; and estate planning. He is currently admitted to practice law in Georgia, Florida, the District of Columbia and Puerto Rico and currently licensed as a CPA in Florida. He received a Master of Laws from the Georgetown University Law Center in 1997, where he concentrated in Labor and Employment Law (LL. M. in Labor and Employment Law) and a Juris Doctor, cum laude, from the Inter American University.

ContractsCounsel verified
10 years practicing
Free Consultation

Graduate of Georgetown Law (J.D. and LL.M in Taxation) Injury Claims Adjuster before law school for top insurer Eight plus years of legal experience Past roles: Associate at premier boutique law firm in the DC metro area Policy Associate at a large academic and research institution Solo Practice Areas of Expertise: Contracts Business Formation Trusts and Estates Demand Letters Entertainment Transactions

ContractsCounsel verified
18 years practicing
Free Consultation

As a business law attorney serving Coral Springs, Parkland, and Broward County, FL, Matthew has been recognized as “AV” rated, which is the highest rating an attorney can achieve through Martindale’s Peer Review system. Year after year Matthew is listed in the “Legal Leaders” publication as a top-rated attorney in South Florida in the areas of litigation, commercial litigation, and real estate. Matthew is also a graduate and instructor of the Kaufman Foundation’s FastTrac NewVenture Program, presented by the Broward County Office of Economic and Small Business Development.

ContractsCounsel verified
Managing Partner
6 years practicing
Free Consultation

John Benemerito is the Founder and Managing Partner of Benemerito Attorneys at Law. Admitted to practice in New York and New Jersey, John represents small business owners and startups in the areas of Business and Securities Law. John received his Bachelors Degree at John Jay College of Criminal Justice where he majored in Criminal Justice. Afterwards, he attended New York Law School where he focused his studies on Corporate and Securities Law. John comes from a family of entrepreneurs. From as far back as he can remember he was always involved in his family’s numerous businesses. At the age of fifteen, John entered into a new business venture with his father and managed to grow and maintain that business through high school, college and law school.John is currently a co founder in over five different businesses. After law school, John decided that he wanted to help people like himself. He opened his own law practice and began working primarily with small business owners until he was introduced into the startup world. Ever since that time, John has worked with hundreds of startups and thousands of entrepreneurs from all different backgrounds in helping them achieve their goals. Having been an entrepreneur his entire life, John understands what it takes to create and maintain a successful business. He enjoys sitting down and working with his clients in figuring out each of their unique challenges.

ContractsCounsel verified
11 years practicing
Free Consultation

California-based small business attorney handling matters related to securities, mergers & acquisitions, corporate governance, and other business transactions.

ContractsCounsel verified
Associate Attorney
6 years practicing
Free Consultation

I joined Enterprise Law Group, LLP as an Associate in March 2020. My practice has involved a wide range of legal matters from commercial real estate, finance and international business transactions to litigation matters including commercial disputes, personal injury and medical malpractice. Proficient in Spanish, I graduated from the University of Kentucky College of Law, the Patterson School of Diplomacy and International Commerce, and the University of Southern California. Prior to my legal career, I sought diverse professional experiences. After graduating from college, I orchestrated my own volunteering experience in southern Peru with a small non-profit organization. Later I gained valuable professional experience as part of a U.S. Senate campaign, and after that I joined the public policy team at Greater Louisville, Inc., Louisville's Chamber of Commerce affiliate. Prior to law school, I embarked on a month long excursion with the Northern Outdoor Leadership School in Alaska, which gave me a new found appreciation for sustainability.

ContractsCounsel verified
Managing Attorney
11 years practicing
Free Consultation

Agnes Mombrun Geter is the Founder and Managing Attorney of Mombrun Law, PLLC. She is an experienced attorney and is a member of the Florida Bar, New Jersey Bar, and the Pennsylvania Bar. The firm's practice focuses on Estate Planning, Business Law, and Debt Settlement including IRS Debt Relief. The firm's goal is to simplify the law and provide clients with the confidence and information necessary to make their decisions. The firm also provides project-based legal services to other attorneys and law firms, along with assisting as personal counsel and local counsel on legal matters.

ContractsCounsel verified
Solo Practioner
40 years practicing
Free Consultation

Have over 40+ years of corporate and commercial law experience.

ContractsCounsel verified
Business Attorney
19 years practicing
Free Consultation

I am a business attorney with years of experience advising individual entrepreneurs and small businesses on issues ranging from entity selection/formation to employment law compliance, to intellectual property protection and exploitation. I often act as General Counsel for my clients fulfilling the legal function as part of a team of managers. I look forward to learning more about your business and how I may be of assistance.

Find the best lawyer for your project

Browse Lawyers Now

Want to speak to someone?

Get in touch below and we will schedule a time to connect!

Request a call