How To Write A Promissory Note

Clients Rate Lawyers on our Platform 4.9/5 Stars
based on 4,036 reviews

Jump to Section

Need help with a Promissory Note?

Post Project Now

Post Your Project (It's Free)

Get Bids to Compare

 Hire Your Lawyer

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

Albert M.

9 projects on CC
View Profile

Matthew S.

2 projects on CC
View Profile

Zachary J.

53 projects on CC
View Profile

Michael M.

182 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

Orin K. on ContractsCounsel
View Orin
5.0 (3)
Member Since:
October 23, 2021

Orin K.

Free Consultation
Get Free Proposal
New York
19 Yrs Experience
Licensed in NY
New York Law School

I'm an employment lawyer. I counsel and represent employees in all professions, from hourly workers to doctors and executives, and all in between. I also counsel and represent employers in many aspects of employment law.

Abhijit "Beej" D. on ContractsCounsel
View Abhijit "Beej"
5.0 (1)
Member Since:
October 25, 2021
Scott S. on ContractsCounsel
View Scott
4.9 (14)
Member Since:
October 26, 2021

Scott S.

Free Consultation
Get Free Proposal
New York, NY
16 Yrs Experience
Licensed in NY
Benjamin Cardozo School of Law

Scott graduated from Cardozo Law School and also has an English degree from Penn. His practice focuses on business law and contracts, with an emphasis on commercial transactions and negotiations, document drafting and review, employment, business formation, e-commerce, technology, healthcare, privacy, data security and compliance. While he's worked with large, established companies, he particularly enjoys collaborating with startups. Prior to starting his own practice in 2011, Scott worked in-house for over 5 years with businesses large and small. He also handles real estate leases, website and app Terms of Service and privacy policies, and pre- and post-nup agreements.

Reuben O. on ContractsCounsel
View Reuben
Member Since:
October 21, 2021

Reuben O.

Senior Managing Attorney
Free Consultation
Get Free Proposal
14 Yrs Experience
Licensed in ID, WA
The University of Iowa

As an entrepreneur at heart, I enjoy working with business owners and executives on a variety of corporate matters, including mergers and acquisitions, corporate financing, corporate governance, public and private securities offerings, privacy regulation and early-stage corporate matters including formation. As a lawyer and business professional, I understand the value of providing personal service and focused legal answers to clients navigating a rapidly changing regulatory environment. Whether in Aerospace, Consumer Goods, or Technology, I find great success in work collaboratively with clients to strategical structure their business or implementing strategic growth-oriented financing opportunities.

Thaddeus W. on ContractsCounsel
View Thaddeus
Member Since:
October 22, 2021

Thaddeus W.

Free Consultation
Get Free Proposal
Los Angeles, Ventura County, New York City
26 Yrs Experience
Licensed in CA, NY
University of Notre Dame Law School

Experienced legal counsel to entrepreneurs, small businesses, and investors. Advising clients starting, buying, selling, operating, financing, and investing in businesses // U.S. Army Veteran // Ironman Triathlete, Marathoner, Open Water Swimmer, USAT Triathlon Coach // Lover of Dogs, Cribbage, Craft Beer, Bourbon, and Cigars

Nichole C. on ContractsCounsel
View Nichole
Member Since:
October 22, 2021

Nichole C.

Free Consultation
Get Free Proposal
17 Yrs Experience
Licensed in KY
University of Louisville, Brandeis School of Law

Licensed attorney in KY and Federally JD, 2006 University of Louisville MBA, 2006 University of Louisville BS, 2001 Berea College Licensed Title Agent Arbitrator and Certified Mediator Business Consultant Adjunct Professor, Law and Business

Michelle F. on ContractsCounsel
View Michelle
Member Since:
January 24, 2022

Michelle F.

Free Consultation
Get Free Proposal
New York
5 Yrs Experience
Licensed in NY
Touro College Jacob D. Fuchsberg Law Center

I provide comprehensive legal and business consulting services to entrepreneurs, startups and small businesses. My practice focuses on start-up foundations, business growth through contractual relationships and ventures, and business purchase and sales. Attorney with a demonstrated history of working in the corporate law industry and commercial litigation. Member of the Bar for the State of New York and United States Federal Courts for the Southern and Eastern Districts of New York, Southern and eastern District Bankruptcy Courts and the Second Circuit Court of Appeals. Skilled in business law, federal court commercial litigation, corporate governance and debt restructuring.

Steve C. on ContractsCounsel
View Steve
Member Since:
October 26, 2021

Steve C.

Principal | Attorney
Free Consultation
Get Free Proposal
24 Yrs Experience
Licensed in CA
Loyola Law School

I am a corporate and business attorney in Orange County, CA. I advise start-ups, early-growth companies, investors, and entrepreneurs in various sectors and industries including technology, entertainment, digital media, healthcare, and biomedical.

Oscar B. on ContractsCounsel
View Oscar
Member Since:
October 28, 2021

Oscar B.

Free Consultation
Get Free Proposal
Saint Petersburg, FL
21 Yrs Experience
Licensed in FL
Stetson University, College of Law

Oscar is a St. Petersburg native. He is a graduate of the University of Florida and Stetson University, College of Law. A former US Army Judge Advocate, Oscar has more than 20 years of experience in Estate Planning, Real Estate, Small Business, Probate, and Asset Protection law. A native of St. Petersburg, Florida, and a second-generation Gator, he received a B.A. from the University of Florida and a J.D. from Stetson University’s College of Law. Oscar began working in real estate sales in 1994 prior to attending law school. He continued in real estate, small business law, and Asset Protection as an associate attorney with the firm on Bush, Ross, Gardner, Warren, & Rudy in 2002 before leaving to open his own practice. Oscar also held the position of Sales & Marketing Director for Ballast Point Homes separately from his law practice. He is also a licensed real estate broker and owner of a boutique real estate brokerage. As a captain in the US Army JAG Corps, he served as a Judge Advocate in the 3rd Infantry Division and then as Chief of Client Services, Schweinfurt, Germany, and Chief of Criminal Justice for the 200th MP Command, Ft. Meade, Maryland. He is a certified VA attorney representative and an active member of VARep, an organization of real estate and legal professionals dedicated to representing and educating veterans. Oscar focuses his practice on real small business and asset protection law.

Rachael D. on ContractsCounsel
View Rachael
Member Since:
October 28, 2021

Rachael D.

Free Consultation
Get Free Proposal
New York
11 Yrs Experience
Licensed in NY
Touro Law

We help simplify every transaction and provide a superior level of customer service to create long lasting and trusted relationships with our clients. Our goal is to guide our clients with practical and zealous legal representation and eliminate the difficult nature of any legal transaction.

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