How to Write a Promissory Note in Google Docs
A promissory note is a legally binding written agreement to repay a debt. This is a legal contract between the lender and the borrower. When making a significant personal loan to a business will likely warrant an official promissory note. However, it can also be used in less formal situations like when you lend money to a family member or friend. Writing a promissory note can be difficult, especially when this is your first time writing it. There are elements in a promissory note that should be present that you might not know. Hence, here is a guideline for producing a promissory note through the web-based Google Docs quickly.
1. Determine its Purpose
There are a lot of promissory notes such as secured promissory, convertible promissory, simple promissory, demand promissory, mortgage promissory, and loan promissory. These different types of promissory notes have different usage and purposes. You can typically find a promissory note in school where students will give a promissory note for the tuition fee that he/she cannot pay for the meantime. The formal document can also be used in a business, hospital, and bank. Before writing a promissory note, make sure that you understand its different types so that it will be easier for you to create that document that will cater to a particular purpose.
2. Write the Amount
Your promissory note should always state the amount you are going to borrow. It should be written in numbers and spelled out in words, similar to writing a check. Writing it in this way will ensure that the amount due will not be misread or altered.
3. Include the Loan Terms
The loan term is similar to the terms and conditions in a contract. The loan terms will explain when is the first and last payment due, how often the payment will be made, and how it will be paid back. Be explicit the dates rather than an estimated timeline. You can also explain in this section whether there is a charged interest on the loan. Always specify what the rat will be and if it is fixed or variable. Similar to writing the amount, it should be written in a numerical percentage and spelled out.
4. State the Collateral
There are some who forget loan agreements that are backed by collateral in case the borrower will not be able to repay their loan. This is what you call a secured promissory. The promissory note should outline what the collateral is and its value if the loan is backed by collateral. However, not all promissory notes are backed by collateral. The collateral estimate should be equal or more than the debt. In the meantime, the complete opposite of the awarded one is an unsecured promissory note. No insurance is required to acquire it.
5. Inscribe the Lender and Borrower's Information
This section includes all borrower and lender's names and contact information. It defines who the lender is and who the borrower is, as well as the mailing name or digital destination to send payments.