Promissory Note Cost

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What does a promissory note cost? If you have taken out a loan, you may have signed a promissory note. However, if you need to hire an attorney, you may be wondering how much it will cost. Let’s explore this question and review some general information about promissory notes.

How Much Does a Promissory Note Cost?

A promissory note is a debt instrument, sometimes called a loan agreement or notes payable. It serves as a written promise by one party to pay back a loan taken from another party.

While most commonly used by financial institutions like banks that regularly lend money, a promissory note can enable anyone to become a lender. This allows companies and individuals to get financing from sources other than banks. The funding source can be an individual or a company willing to provide financing and carry the note.

Promissory notes are often used for the following transactions:

  • Business loans
  • Auto loans
  • Mortgages
  • Personal loans
  • Student loans

Suppose you are considering lending or borrowing money that requires a promissory note. In that case, you should speak with a knowledgeable attorney who has experience with promissory notes. A lawyer can guide you through drafting a legal promissory note and ensuring it contains all necessary information to make it legally enforceable.

Based on ContractsCounsel’s marketplace data, the average cost of a project involving a promissory note is $493.53.

Do You Need a Lawyer for a Promissory Note?

While a lawyer isn’t mandatory for drafting a promissory note, it is a good idea to seek legal advice if you plan on lending or borrowing money. Promissory notes can be complicated, and there are many different types of promissory notes, including:

  • Simple promissory notes
  • Demand promissory notes
  • Secured promissory notes
  • Unsecured promissory notes

Each type of note serves a different agreement. Some promissory notes are as simple as a one-time payment, sometimes called an IOU. Other promissory notes may be more complicated, like for a mortgage. A lawyer can help you determine which note to use.

Can I Write My Own Promissory Note?

You can write your own promissory note, and it is possible to find templates for promissory notes online. However, if you do draft your own note, it is a good idea to have it reviewed by a lawyer. Whether you are loaning or borrowing money, you want to ensure that you and your finances are protected.

To fully protect yourself, your promissory note needs to include specific information. The following details can be found on most promissory notes:

  • Name of the borrower. Referred to as the “payor,” this is the party who is borrowing the money
  • Name of the lender. The lender or “payee” is providing the loan to the borrower
  • Date. The promissory note should include the date that the promise to repay the loan is effective
  • Amount of the loan. The note must include the total amount of money the payor is borrowing
  • First payment date. The date that the first payment is due on the payment schedule
  • Payment details. Details like the amount of each payment, the due date of each payment, and how the payment is to be made should appear on the promissory note
  • Interest rate. Some loans are subject to interest, so the promissory note must include the interest rate and whether the rate is simple or compounded
  • End date. Depending on the payment schedule, the date the promissory note ends will vary. Some loans like amortized loans require a series of even payments and the loan ends when the final payment is made. Balloon payments have a specific date that the entire balance is full. Whatever the agreed-upon schedule, the promissory note needs to be clearly stated.
  • Signatures of both parties. The payor and payee must sign the promissory note for the document to be legally enforceable.

Read this article for a more in-depth look at promissory notes.

Promissory Note Projects

Promissory Note Drafting

If you need to draft a promissory note, you should hire a knowledgeable lawyer. Borrowing and lending money is a serious commitment, and without proper documentation, you could be putting yourself at financial risk. An attorney familiar with promissory notes will know all applicable laws and how to create a comprehensive document that protects both parties.

Promissory Note Dispute

Unfortunately, disputes over money are far too common. Even when both parties sign a promissory note, issues arise from non-payment, missing scheduled payments, or failure to deliver the funding that was agreed upon.

You will need a lawyer to help enforce the promissory note to ensure that you do not suffer any damages due to the other party’s actions. If a resolution cannot be reached, you may need to file a breach of contract lawsuit and decide the matter in court.

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Promissory Note Drafting Cost

If you hire a lawyer to draft a promissory note, you will be charged for their time and legal expertise. The amount a lawyer charges will vary based on the area of law, experience, and geographic location.

ContractsCounsel’s marketplace data shows the average promissory note drafting costs are $466.37 across all states and industries.

Promissory Note Dispute Cost

A dispute involving a promissory note could be resolved easily and quickly, or it could proceed to a trial. However, the nature of the dispute and how long a resolution takes will significantly impact the cost of an attorney.

ContractsCounsel’s marketplace data shows the average promissory note dispute cost to be $575.00 across all states and industries.

How Do Lawyers Charge for a Promissory Note?

Hourly Rates for Promissory Notes

An hourly rate fee schedule is one of the most common ways a lawyer charges their clients. A lawyer will establish an hourly rate and then bill for each hour working on the case. For example, suppose a client hires a lawyer for a promissory note dispute. In that case, the lawyer will likely charge an hourly rate because there is no telling how long the case may take to resolve.

ContractsCounsel’s marketplace data shows the average hourly rate for a promissory note lawyer ranges from $200 - $350 per hour.

Flat Fee Rates for Promissory Notes

A flat fee rate schedule is often used for specific tasks or projects like drafting a promissory note. When a project has a definite end, like a drafting project, a lawyer can estimate the time the task will take and charge accordingly.

Flat rate fees are usually paid up front. The client benefits by knowing exactly how much the legal service will cost.

ContractsCounsel’s marketplace data shows the average flat fee rate for a promissory note is $493.53.

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