How to Write a Promissory Note For Personal Loans

It feels good to help a family member or friend by loaning them money, especially if they’re facing eviction, repossession or some other difficult life situation. While emotions may encourage you to quickly hand over money for a loved one in need, it’s smart to take a step back and be sure your interests are covered. You want to ensure the borrower is clear about your expectations for them to repay the ‘family loan’.

Financial loans between family or friends can quickly become a point of contention if all parties involved aren’t in complete agreement about the terms. Creating a simple promissory note provides a reliable way to set the terms of a loan agreement and address disputes that may arise.

What is a promissory note?

A promissory note is a document used to explain the details of a loan agreement. The person borrowing the money must review the loan terms and indicate their willingness to enter into the agreement by signing the promissory note.

To be thorough, a promissory note should include a core group of details:

  • Total amount of money being loaned
  • Date of the loan
  • How the loan was delivered (cash, check, direct deposit)
  • The name and address of the person loaning the money
  • The name and address of the person borrowing the money
  • Terms of repayment: schedule of repayment, amount of each payment and manner of payments (in-person, cash, check, etc.)
  • Interest to be charged related to the loan, if any
  • Penalties or other terms for late payment or non-payment, if any

Promissory notes are quite simple and can be prepared by anyone. They do not need to be prepared by a lawyer or be notarized. It isn’t even particularly significant whether a promissory note is handwritten or typed and printed.

Have your family member or friend sign a promissory note

Whether it’s because they feel rushed or they fear an awkward conversation, many people who loan money to friends or family don’t take time to prepare a promissory note. They hand over cash on a verbal promise of repayment, often without specific details.

Having your family member or friend sign a promissory note doesn’t mean you do not trust them to repay the loan. A promissory note provides both parties clear and mutual agreement of terms for repaying the loan, removing the potential for misunderstandings.

If for some reason the borrower does not fulfill the terms of the loan agreement, the lender has the ability to bring a legal claim against the borrower to compel them to repay. With a signed promissory note in hand, the lender has the first major item required to fulfill their burden of proof.

The professionals at Sterk Family Law Group can offer you advice on how to draft a promissory note for your personal loan. Contact us today.


This is a legal advertisement from Sterk Family Law Group. It does not constitute legal advice and should not be construed as such. This article is for informational and educational purposes only.

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