Free Promissory Note Template (Secured or Unsecured)

PROMISSORY NOTE

Principal amount: $ ____________ Date: ______________ Place: ______________________________ (city, state)

Borrower: ______________________________, address: ______________________________ ("Borrower")
Lender: ______________________________, address: ______________________________ ("Lender")

1. Promise to pay. For value received, Borrower promises to pay Lender the principal sum of $ ____________ (______________________________ dollars), plus interest as stated below.

2. Interest. ☐ This loan carries no interest. ☐ Interest accrues on the unpaid principal at ______% per year, simple interest, from the date of this Note until paid in full. In no case will the interest rate exceed the maximum rate allowed by law; any amount paid above that limit will be applied to principal or refunded.

3. Repayment. Choose one:
☐ Lump sum: Borrower will pay all principal and interest in full on or before ______________.
☐ Installments: Borrower will pay ______ monthly installments of $ ____________, beginning on ______________ and on the same day of each month after that, until paid in full. The final installment is due on ______________. Each payment is applied first to late fees, then to interest, then to principal.
☐ On demand: Borrower will pay all principal and interest within ______ days after Lender's written demand.

4. Method of payment. Payments will be made by ☐ bank transfer ☐ check ☐ payment app ☐ other: ______________ to Lender at the address or account Lender designates in writing.

5. Prepayment. Borrower may prepay all or part of this Note at any time without penalty. Prepayments are applied to accrued interest first, then principal.

6. Late payment. If any payment is more than ______ days late, Borrower will pay a late fee of $ ______ or ______% of the late payment, but not more than the law allows.

7. Default. Borrower is in default if: (a) any payment is more than ______ days late; (b) Borrower becomes insolvent or files for bankruptcy; or (c) Borrower breaks any other promise in this Note and does not fix it within ______ days of written notice. On default, Lender may, after giving any notice required by law, declare the entire unpaid principal and accrued interest immediately due ("acceleration").

8. Security. ☐ Unsecured: this Note is not secured by any property. ☐ Secured: to secure payment, Borrower grants Lender a security interest in the following property (the "Collateral"): ______________________________ (description, serial number or VIN). Borrower will keep the Collateral in good condition and insured, and will not sell it or grant another lien on it without Lender's written consent. Borrower authorizes Lender to file any financing statement or title notation needed to perfect this security interest. On default, Lender may exercise the rights of a secured party under the Uniform Commercial Code as adopted in the governing state.

9. Collection costs. If Lender must take legal action to collect, Borrower will pay Lender's reasonable collection costs and attorney fees, to the extent allowed by law.

10. Co-signer. ☐ None. ☐ The co-signer below is jointly and severally responsible with Borrower for all amounts due under this Note.

11. Waivers. Borrower waives presentment, demand for payment, notice of dishonor and protest, to the extent allowed by law. Lender's delay in exercising a right is not a waiver of it.

12. General. This Note is governed by the laws of the state of ______________. If any part is unenforceable, the rest remains in effect. Any change must be in writing and signed by Borrower and Lender. This Note may be signed electronically.

Borrower: ______________________________ Signature: ______________________________ Date: ______________
Co-signer (if any): ______________________________ Signature: ______________________________ Date: ______________
Lender: ______________________________ Signature: ______________________________ Date: ______________