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Unsecured Promissory Note Template

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An unsecured promissory note is a document that details the borrowing of money from one individual or entity to another without security if the debt is not paid in full. Unlike a secured promissory note, the lender is taking into account the borrower’s credibility without receiving anything in return if they shall default on their payments. Typically, payment is structured on a weekly or monthly basis with installments made by specific dates and without pre-payment penalties.

Interest (Usury) Rates

The benefit of creating a loan for the lender is that they take the risk of not getting their money back in exchange for the benefit of having more money at the end of the borrowing period. The way this is calculated is through an interest rate. There is a maximum that is defined by each State as a ‘Usury Rate’ to help consumers not be charged extraordinarily high fees. Although the interest rate should be negotiated by the parties and the State only regulates the maximum amount that can be charged and is not a standard rate.

By State

How to Write

Step 1 – The Parties –  Enter the following:

  • Date the document in dd/m/yy format
  • Borrower’s name
  • Address
  • AND
  • Lender’s name
  • Address
  • AND
  • Loan amount
  • Loan with interest amount
  • Unpaid balance rate
  • Annual percentage rate

Step 2 – Payment –

  • Indicate the preferred repayment method by checking the applicable box
  • Enter the date in which each payment is due in dd/m/yy format

Step 3 – Due Date (Balance due) –

  • Submit the date in which the full balance is due to include late fees and accrued interest in dd/m/yy format

Step 4 – Interest Due in the Event of Default –

  • Enter the amount that the principal shall accrue in the event the borrower should default
  • Enter the percentage rate annually

Step 5 – Titled Sections – Borrower and Lender must review:

  • Allocation of Payments
  • Prepayment
  • Late Fees (Lender, enter the number of days before the payment is considered late – submit the late payment fee)
  • Acceleration – (Submit the number of days allowable before the lender may demand complete repayment)
  • Attorney’s Fees and Costs
  • Waiver of Presentments
  • Non-Waiver
  • Severability
  • Integration
  • Notice
  • Execution

Step 6 – Signatures – Submit the following:

  • Date signatures in dd/m/yy format
  • Lender’s signature
  • Printed name
  • Witnesses signatures
  • AND
  • Borrower’s signature
  • Printed name
  • Witnesses signatures