The note usually appears whenever a creditor provides a loan to the debtor, with the latter assuring repayment in writing. The other relevant clauses of this debt instrument include name, address and contact details of the parties involved, principal amount, issuance date and place, interest rate, due date, etc.Ī promissory note works as an evidence of a borrower’s payment obligation.However, its acceptance by the payee is not required as it already serves the on-record purpose by being a written payment promise from the debtor’s side. The note is duly signed by the issuer.While for investors or lenders, it is a form of debt instrument that typically provides a periodic interest income. It is a means of availing funds by individuals or business organizations.A promissory note signifies a borrower/issuer’s written unconditional promise to pay the due amount on a specific date or as on-demand by the lender.It bears all essential information, including the debt amount, maturity or due date, interest rate, debtor’s signature, issuance place and date. The credit made through a legal contract guarantees repayment within a specified period as mutually agreed upon by both parties. Read more issues the note in favor of the creditor Creditor A creditor refers to a party involving an individual, institution, or the government that extends credit or lends goods, property, services, or money to another party known as a debtor. The borrower could be an individual like a home loan seeker or a corporate body borrowing funds for business expansion. The debtor Debtor A debtor is a borrower who is liable to pay a certain sum to a credit supplier such as a bank, credit card company or goods supplier. Simply speaking, a promissory note is written by a borrower as evidence of the promise to repay the due amount to the lender. A promissory note is defined as a debt instrument in which the issuer of the note promises to pay a specified amount to a party on a particular date.
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