Promissory Note Generator – Free Legal Loan Agreement & IOU
What is a Promissory Note & When Should You Use One?
A Promissory Note is a formal, legally enforceable financial instrument where one party (the Borrower) makes an unconditional written promise to repay a determined sum of money to another party (the Lender) under specified terms, either on demand or at a fixed future date.
Essential Clauses Included in This Note
- Principal & Amortized Interest: Clearly states the borrowed amount, annual percentage rate (APR), and calculated monthly installment or lump-sum maturity payoff.
- Default & Acceleration Clause: If the borrower misses scheduled payments past the allowable grace period, the entire outstanding balance becomes due and payable immediately.
- Collection Costs & Legal Fees: Protects the lender by requiring the defaulting borrower to reimburse reasonable legal fees and collection expenses.
- Governing Law & Severability: Specifies the legal jurisdiction under whose courts any disputes will be resolved.
100% Client-Side Privacy
Loan agreements contain private home addresses, financial figures, and personal identifiers. This tool formats and renders your legal document entirely in your local browser sandbox—zero data is sent across the internet.
Frequently asked questions
Is a promissory note legally binding?
Yes. When signed by the borrower and lender for valid consideration (the loan funds), a promissory note is a legally enforceable contract in small claims and civil courts.
What is the difference between secured and unsecured notes?
An unsecured promissory note relies solely on the borrower's personal creditworthiness. A secured note pledges specific collateral (such as a vehicle title or equipment) that the lender can repossess upon default.
Can I set 0% interest for loans between family or friends?
Yes, you can set the interest rate to 0%. However, under US IRS rules, loans exceeding $10,000 between individuals may be subject to Applicable Federal Rate (AFR) imputed interest rules for tax reporting.
How do I save this note as a PDF?
Click 'Print / Save as PDF'. In your browser print dialog, choose 'Save as PDF' as your destination printer.
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