A Promissory Note is a signed promise, evidenced in writing, where one person agrees to pay another person a specified sum of money.
Creditor: person who will receive payment
Debtor: person who will pay an amount to the Creditor
When to Use this Agreement?
Usually used to guarantee promises to repay borrowed money between two parties. They can be used with or without other (loan) agreements.
Before completing this form, please determine the following:
1. Name of Creditor and Debtor
2. Currency the payments should be made in
3. Type of promissory note required (please see below for the available options)
4. Whether the Debtor should have the option to prepay all or some of the amounts due
5. Agreement date and name of parties of any previous agreement to be referenced to (such as a loan agreement)
Specifications of this Agreement
There are different types of promissory notes which are categorized by the payment methods incorporated in them. In this form, you can choose from the following types of promissory notes:
- Single Payment – this type of Promissory Note provides for the repayment of the loan amount, both the capital and interest, to be made in one single payment on a predetermined date.
- Fixed Interest with Instalments Payments – this type of Promissory Note provides for the repayment of the loan in consecutive equal payments. The interest is calculated on the remaining balance due as of the date of payment.
- Payment upon Demand – this type of Promissory Note provides for repayment of the entire amount of the Promissory Note, both the capital and interest, in one single payment following a written demand by the Creditor.
- Balloon Payment – this type of Promissory Note provides for the repayment of the loan amount in equal payments of capital and interest. However, at the end of the payment schedule there remains a balance that must be paid off in one single payment.
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