Promissory note for lending money

Promissory Note with Payment Schedule

Letters Kate

A borrower has to write a promissory note because it includes the promise from their side to return the money to the lender. The lender usually feels insecure when he has to lend money to someone. The promissory note depends on the agreement and discussion between the lender and the borrower. If the borrower’s financial condition is not good and they cannot pay the borrowed money, they agree to pay it in installments. 

What is a promissory note with a payment schedule?

It is a small legal note written by someone borrowing money. In this note, the borrower states that he will return the borrowed money in small installments and gives a payment schedule. This note has a lot of significance in the legal world as it is regarded as a document on which the lender can take legal action if the borrower fails to return the money, even in installments. 

Why is it important to write a promissory note with a payment schedule?

The person who wants to borrow the money has to prove that he has good financial standing. However, some people fail to prove it. So, they are given another option to return the money through small payments. This way, they can easily return the money.  The lender does not like to lend his money to someone who is not in a position to return it.

Therefore, the borrower tries to convince the lender by writing the promissory note with the payment schedule. Through this note, the borrower states that he will definitely return the money in multiple small payments instead of one with a large sum. In these situations, the borrower also pays the interest because he reaps the benefit of installments. 

What should be included in the promissory note?

This promissory note should include the following points:

Details of the borrower and lender:

This note should clearly state who the lender and borrower of the money stated in the promissory note are. 

The total amount being borrowed: 

The borrower should mention exactly how much he is borrowing and state the amount he is supposed to return to the lender along with the deadline. 

A clear and easy-to-understand payment schedule:

Mention the payment schedule you are ready to follow and the lender’s agreement. When you give his schedule, mention the date of each month you will pay the installment and then mention the amount you will pay with each installment. 

Signatures:

The lender, the borrower, and the guarantor should sign the promissory note. These signatures should be affixed with a non-erasable ink pen. It is very easy to write a note and get it signed by everyone relevant, but you can put yourself in the hot water if you don’t effectively write a promissory note. Therefore, if you are not so professional and don’t have any experience in writing the promissory note, seek the assistance of a legal prosecutor. 

Promissory Note with Payment Schedule

MS Word (.docx) File -142 KB

Download

Writing the promissory note with a payment schedule:

Here are some important points to be kept in mind when you write this note:

Know the terms and conditions:

Following the rules and regulations when writing a note is very important. This way, you will be able to protect yourself legally. Know the state’s policy regarding writing the promissory note and then write it down. 

Know your rights:

Just because you are a borrower in dire need of money does not mean you ignore your rights and let yourself get exploited. You should know where you are being mistreated. The lender can persuade you to write a higher interest rate, but you should know the agreed rate and mention it in the promissory note. This way, you can protect your right and the money you must return.

Sample Notes

#1

Miss Inshal will receive (mentioned amount) lent by XYZ on the 2nd of December 20XX with an interest rate of 5%. The repayment shall be made in 4 monthly installments to be paid by the 10th of each month. Each installment amounts to (mention amount) including the agreed interest. Ms. Inshal shall be liable to pay a fine in the amount of (mention amount) in case of a delay in the payment of the mentioned installments.

#2

For the value received, the undersigned agrees and promises to pay back XYZ the principal amount along with an interest at the rate of 5% in 10 installments. Each installment amounts to [X] and must be paid within the first 5 days of each month. There shall be no extension for the payment dates.

See also: