Is a promissory note legally enforceable?

Yes — a signed note for value received is one of the oldest enforceable instruments there is. Enforcement means suing on the note if unpaid, so keep the original signed copy.

Do I have to charge interest?

No, you can write 0% — but on larger family loans, tax authorities (e.g., the IRS with its minimum AFR rates) may impute interest anyway. For loans in the tens of thousands, ask an accountant.

Promissory note vs loan agreement?

A note is a one-way promise signed by the borrower — right for straightforward loans. A loan agreement is a fuller two-party contract with covenants — right for large or conditional lending.

Promissory Note Template

The written promise behind a personal or business loan: amount, interest, repayment schedule, and what happens on default. Turns 'I'll pay you back' into a document.

PROMISSORY NOTE Principal Amount: Date: FOR VALUE RECEIVED, , of ("Borrower"), promises to pay , of ("Lender"), the principal sum of , with interest at % per annum . 1. REPAYMENT. Borrower will repay: equal installments of , starting , until paid in full. ( ) In full (principal plus accrued interest) on . ( ) On demand, with days' written notice. ] 2. PAYMENT METHOD. Payments by on or before the due date. 3. PREPAYMENT. Borrower may prepay in whole or part at any time without penalty; prepayments apply first to accrued interest, then principal. 4. LATE PAYMENT. Payments more than days late incur a late fee of and default interest at % per annum on the overdue amount. 5. DEFAULT. Borrower is in default if a payment is days late or Borrower becomes insolvent. On default, Lender may declare the entire balance immediately due (acceleration) after days' written notice to cure. 6. SECURITY. This note is . 7. COSTS. Borrower pays Lender's reasonable costs of collection, including legal fees, on default. 8. GOVERNING LAW. Governed by the laws of . SIGNED: _________________________ _________________________ Borrower Lender (optional) Date: Date:

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Using this for something that matters?

This free promissory note covers the standard situation. If real money, property, or an ongoing relationship rides on it, a professionally drafted version — or a quick attorney review of what you've filled in — costs little and removes the guesswork.

Ask any local attorney for a fixed-fee document review — most offer one.

How to use this template

Even for family loans — especially for family loans. The note doesn't signal mistrust; it prevents the misremembering that ruins relationships.
Check your jurisdiction's usury (maximum interest) laws before setting the rate; an unlawful rate can void your interest entirely.
If the loan is secured (clause 6), a promissory note alone usually isn't enough to claim the collateral — you may need a registered security agreement.

These templates are general forms for informational purposes, not legal advice, and no attorney-client relationship is created by using them. Laws vary by state and country — have a licensed attorney review any document before you rely on it.

Common questions

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