Free Promissory Note

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Promissory Note

Loan Amount

Loan Amount

How much is being loaned?

The interest will be:


Frequently Asked Questions
What is compound interest?Simple interest is calculated based only on the original loan amount. In contrast, compound interest is calculated based on both the original loan amount as well as the accumulated interest from previous periods.

The more frequently interest is compounded, the more interest will grow. For example, interest compounded weekly will result in more overall interest paid than interest compounded monthly.

Your Promissory Note

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Promissory Note Page of
Page of

(this "Note")




__________ of ______________________________________ (the "Borrower")


__________ of ______________________________________ (the "Lender")

Principal Amount:      $_____________ USD

  1. FOR VALUE RECEIVED, The Borrower promises to pay to the Lender at such address as may be provided in writing to the Borrower, the principal sum of $__________ USD, without interest payable on the unpaid principal, beginning on December 15, 2018.
  2. This Note will be repaid in full on December 15th, 2018.
  3. All costs, expenses and expenditures including, and without limitation, the complete legal costs incurred by the Lender in enforcing this Note as a result of any default by the Borrower, will be added to the principal then outstanding and will immediately be paid by the Borrower.
  4. If any term, covenant, condition or provision of this Note is held by a court of competent jurisdiction to be invalid, void or unenforceable, it is the parties' intent that such provision be reduced in scope by the court only to the extent deemed necessary by that court to render the provision reasonable and enforceable and the remainder of the provisions of this Note will in no way be affected, impaired or invalidated as a result.
  5. This Note will be construed in accordance with and governed by the laws of the Commonwealth of Virginia.
  6. This Note will enure to the benefit of and be binding upon the respective heirs, executors, administrators, successors and assigns of the Borrower and the Lender. The Borrower waives presentment for payment, notice of non-payment, protest and notice of protest.

IN WITNESS WHEREOF the parties have duly affixed their signatures under seal on this ________ day of ________________, ________

this ________ day of ________________, ________.




this ________ day of ________________, ________.




Promissory Note

Alternate Names:

A Promissory Note is also known as:

  • IOU
  • Loan Agreement
  • Notes Payable
  • Demand Note
  • Commercial Paper

What is a Promissory Note?

A Promissory Note is a legal form that documents a loan between two parties. It enforces a borrower's promise to pay back a sum of money to a lender within a specific time period.

What are promissory notes used for?

  • Private or personal loans between family members, friends or colleagues
  • Student or educational loans
  • Real estate loans, mortgages, or property down payments
  • Bank loans
  • Commercial or business loans
  • Car or vehicle loans

Should I use a Promissory Note or Loan Agreement?

A Promissory Note is generally used for straightforward loans and basic payment terms. A Loan Agreement is used when a more complex payment plan is needed. Whichever you choose depends on the terms you wish to include and your personal situation.

How do I write a Promissory Note?


Identify the lender and borrower. The lender may be a corporation or individual.

Payment Plan

Choose a schedule for when the loan needs to be repaid, including how the borrower will make his or her payments and how often. Payments can be made weekly, monthly, or yearly.


While the loan amount may be straightforward, you will need to decide whether to charge interest and if it will be compounded monthly or yearly.


As part of your Promissory Note, there may be an option to include collateral or security. Collateral is protection for the lender against a borrower's default. If the borrower defaults, the lender can become the owner of the collateral or sell it to pay the outstanding amount. Collateral may be a vehicle, jewelry, or other assets worth the equivalent or more than the loan itself.


Amendments to the Loan Agreement can only be made if both the lender and borrower agree to change the terms.


Once complete, the loan contract should be signed by both the lender and borrower to bind the terms.


After the terms are signed, the borrower is expected to make payments regularly according to the agreement. If the borrower defaults on a payment, the lender may demand the whole amount immediately as well as charge a higher interest rate until the lender is paid.

Related Documents:

Frequently Asked Questions:

Promissory Note FAQ
Sample Promissory Note


Promissory Note

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