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Free Promissory Note Template

Create a legal promissory note for loans between friends, family, or business partners. Include interest rates, payment schedules, and repayment terms with our US template.

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PROMISSORY NOTE
State Of California
LENDER (PAYEE)
Sarah Mitchell
789 Lender Street, New York, NY 10001
BORROWER (MAKER)
Robert Chen
456 Borrower Avenue, New York, NY 10002
Principal: $15,000.00 · Date: March 1, 2026 · Due: March 1, 2028
Schedule: monthly
This Promissory Note (this "Note") is made as of March 1, 2026 by Robert Chen ("Borrower") in favor of Sarah Mitchell ("Lender"). The parties agree as follows:
1.
PROMISE TO PAY
FOR VALUE RECEIVED, Robert Chen ("Borrower"), residing at 456 Borrower Avenue, New York, NY 10002, hereby unconditionally promises to pay to the order of Sarah Mitchell ("Lender"), at 789 Lender Street, New York, NY 10001, or at such other place as the Lender may designate in writing, the principal sum of $15,000.00 (Fifteen Thousand Dollars), together with any applicable interest and charges as set forth herein, in monthly installments, with the final balance due and payable on or before March 1, 2028.

This Note is intended to be a negotiable instrument within the meaning of Uniform Commercial Code Article 3, including without limitation UCC section 3-104 (requirements for negotiability), and to evidence the issuance of an instrument as described in UCC section 3-105. Unless a shorter period applies under the governing jurisdiction's statute of limitations, an action to enforce the obligation of the Borrower to pay this Note must be commenced within six (6) years after the due date or dates stated in the Note or, if a due date is accelerated, within six (6) years after the accelerated due date, consistent with UCC section 3-118.
2.
INTEREST
The outstanding principal balance of this Note shall bear simple interest at the fixed rate of 6.5% per annum (the "Interest Rate"). Interest shall be calculated on the basis of a 365-day year on the actual number of days elapsed, accruing daily on the outstanding principal balance until paid in full.

Usury Savings Clause. Notwithstanding any other provision of this Note, the parties intend to comply strictly with all applicable civil and criminal usury laws. Examples of such laws include New York Penal Law section 190.40 (criminal usury) and article XV section 1 of the California Constitution (civil usury rate caps). If any interest, charge, or fee paid or payable under this Note, when aggregated and computed in the manner required by applicable law, would exceed the maximum rate lawfully permitted, then (a) the rate of interest shall automatically be reduced to the maximum rate lawfully permitted, and (b) any excess previously paid shall be applied to reduce the outstanding principal balance of this Note or, if the principal has been fully paid, refunded to the Borrower.

Consumer Credit. If this Note evidences a loan that constitutes "consumer credit" within the meaning of the Truth in Lending Act, 15 U.S.C. section 1601 et seq., and its implementing Regulation Z, any required disclosures shall be provided separately, and in the event of any inconsistency, the statutorily required disclosures shall control.
3.
REPAYMENT
The Borrower agrees to repay this Note in equal monthly installments, commencing on April 1, 2026 and continuing on the same day of each subsequent monthly period thereafter until fully paid. The final installment, due on or before March 1, 2028, shall include all remaining principal and accrued interest. Each installment payment shall be applied first to accrued and unpaid interest, then to the outstanding principal balance.
4.
PREPAYMENT
The Borrower may prepay all or any portion of the outstanding principal balance of this Note at any time; however, any prepayment shall be subject to a prepayment penalty of $250.00 (the "Prepayment Penalty"). Such Prepayment Penalty shall be due and payable simultaneously with the prepayment amount and shall be in addition to all accrued and unpaid interest through the date of prepayment. Any partial prepayment shall be applied first to the Prepayment Penalty, then to accrued and unpaid interest, then to the outstanding principal balance.
5.
LATE FEES
If any payment required under this Note is not received by the Lender within 5 calendar days after its due date, the Borrower shall pay a late fee of $50.00 for each such delinquent payment. Late fees shall be in addition to, and not in lieu of, any other remedies available to the Lender. Late fees shall not be deemed interest for purposes of any usury law.
6.
SECURITY INTEREST
To secure the full and faithful performance of all obligations under this Note, the Borrower hereby grants to the Lender a security interest in the following collateral (the "Collateral"): 2020 Honda Civic, VIN 1HGCM82633A987654, registered in Borrower's name. The Borrower represents and warrants that the Borrower has good and marketable title to the Collateral, free and clear of all liens and encumbrances except as disclosed to the Lender. The Borrower agrees to execute such financing statements and other documents as the Lender may reasonably request to perfect and maintain the Lender's security interest in the Collateral. Upon default, the Lender shall have all rights and remedies of a secured party under the Uniform Commercial Code as adopted in the State of California.
7.
GUARANTY
In consideration of the Lender extending credit to the Borrower, Jennifer Chen of 456 Borrower Avenue, New York, NY 10002 ("Guarantor") hereby unconditionally and irrevocably guarantees to the Lender the full and punctual payment of all amounts due under this Note when due, whether by acceleration or otherwise. The Guarantor's obligation is a guarantee of payment, not of collection, and the Lender shall not be required to proceed against the Borrower or any collateral before proceeding against the Guarantor. This guaranty shall be binding upon the Guarantor and the Guarantor's heirs, executors, administrators, and assigns.
8.
DEFAULT
Each of the following events or conditions shall constitute an "Event of Default" under this Note: (a) the Borrower fails to make any payment of principal or interest when due hereunder, and such failure continues unremedied for a period of ten (10) calendar days after the due date; (b) the Borrower becomes insolvent, makes a general assignment for the benefit of creditors, or a petition in bankruptcy or for reorganization is filed by or against the Borrower; (c) the Borrower breaches any representation, warranty, or covenant contained in this Note and fails to cure such breach within fifteen (15) days after written notice from the Lender; or (d) any judgment, writ, or warrant of attachment is issued against the Borrower or any of the Borrower's property in an amount that materially affects the Borrower's ability to perform obligations under this Note.
9.
ACCELERATION
Upon the occurrence of an Event of Default as defined herein, the entire unpaid principal balance of this Note, together with all accrued and unpaid interest, late fees, and any other amounts due hereunder, shall, at the sole and absolute option of the Lender, become immediately due and payable in full without further notice, presentment, demand, protest, or any other formality, all of which are hereby expressly waived by the Borrower. The Lender's election to accelerate shall be exercised by written notice delivered to the Borrower at the address stated herein. The Lender's failure to exercise the right of acceleration upon any default shall not constitute a waiver of such right as to any subsequent default.
10.
ATTORNEY'S FEES AND COLLECTION COSTS
If any Event of Default occurs and the Lender retains counsel or incurs costs in connection with the enforcement of this Note or the collection of any amounts due hereunder, the Borrower agrees to pay all reasonable attorney's fees, paralegal fees, court costs, filing fees, and all other reasonable costs and expenses incurred by the Lender in connection with such enforcement or collection, whether or not formal legal proceedings are commenced and whether at trial, on appeal, or in any bankruptcy or insolvency proceeding. Such fees and costs shall be added to the outstanding principal balance of this Note and shall bear interest at the rate specified herein from the date incurred until paid in full.

All collection activity shall be conducted in compliance with applicable law. If the obligation evidenced by this Note is a "debt" and the collector is a "debt collector" within the meaning of the Fair Debt Collection Practices Act, 15 U.S.C. section 1692 et seq., collection shall be undertaken consistent with that Act. Any recovery by wage garnishment, bank levy, or other execution shall be subject to the federal restrictions in Title III of the Consumer Credit Protection Act, 15 U.S.C. sections 1671-1677, and to any stricter limits imposed by the law of the state in which the Borrower resides or is employed.
11.
WAIVER OF PRESENTMENT
The Borrower and all endorsers, sureties, and guarantors of this Note, if any, hereby waive presentment for payment, demand, notice of demand, notice of non-payment, notice of dishonor, protest, and notice of protest. No delay or omission on the part of the Lender in exercising any right hereunder shall operate as a waiver of such right or of any other remedy under this Note. A waiver on any one occasion shall not be construed as a bar to, or waiver of, any right or remedy on any future occasion.
12.
SEVERABILITY
If any provision of this Note is found by a court of competent jurisdiction to be invalid, illegal, or unenforceable, the remaining provisions of this Note shall continue in full force and effect. The invalid or unenforceable provision shall be modified to the minimum extent necessary to make it valid and enforceable, consistent with the original intent of the parties.
13.
ENTIRE AGREEMENT
This Promissory Note constitutes the entire agreement between the Borrower and the Lender with respect to the subject matter hereof and supersedes all prior oral or written agreements, representations, or understandings relating to this loan transaction. This Note may not be amended, modified, or supplemented except by a written instrument signed by both the Borrower and the Lender.
14.
GOVERNING LAW AND JURISDICTION
This Promissory Note shall be governed by and construed in accordance with the laws of the State of California, without regard to its conflict of law provisions. The Borrower hereby irrevocably consents to the exclusive jurisdiction of the state and federal courts located in the State of California for the resolution of any dispute arising out of or relating to this Note. The Borrower waives any objection to venue or jurisdiction in such courts.
IN WITNESS WHEREOF, the parties have executed this Promissory Note as of the date first written above.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the Effective Date first written above.
BORROWER (MAKER)
Robert Chen
Borrower
Robert Chen
Date: ____________________
LENDER (PAYEE)
Sarah Mitchell
Lender
Sarah Mitchell
Date: ____________________
CO-SIGNER / GUARANTOR
Jennifer Chen
Guarantor
Jennifer Chen
Date: ____________________
NOTARY ACKNOWLEDGMENT
State of ________________________, County of ________________________

On this ______ day of ________________________, 20______, before me personally appeared Robert Chen, known to me (or satisfactorily proven) to be the person whose name is subscribed to the within instrument, and acknowledged that they executed the same for the purposes therein contained.
Notary Public Signature
My commission expires: ___________________________

What Is a Promissory Note?

A U.S. promissory note is a written promise from a borrower to repay a specific sum of money to a lender by a specified date. It is a legally binding American financial document that establishes the loan terms, including the principal amount, interest rate, and repayment schedule. Unlike an informal IOU, a promissory note is enforceable in court.

Promissory notes are used for various types of loans, including personal loans between friends or family members, business loans, and small business financing. They provide legal protection for both parties by clearly documenting all loan terms and payment obligations. A promissory note can be secured with collateral or unsecured, depending on the lender's preference.

Creating a written promissory note is important even for loans to people you trust. It prevents misunderstandings about payment amounts, due dates, and interest rates. If a dispute arises, the promissory note serves as evidence of the agreed-upon terms and can be used to enforce the debt in court.

What's Covered in This Template

Doxuno's promissory note template includes all essential clauses and sections needed to create a legally binding loan document. Each section can be customized to match your specific loan arrangement and terms.

Borrower and Lender Info

Loan Amount

Interest Rate and Calculation

Repayment Schedule

Payment Due Dates

Prepayment Terms

Default Provisions

Collateral Terms

Acceleration Clause

Waiver of Presentment

Governing Law

Signatures and Notarization

How to Create Your Promissory Note

Creating a promissory note requires no legal background. Our template walks you through every section with clear guidance. You can complete a comprehensive promissory note in just minutes.

  1. 1

    Identify the Lender and Borrower

    Provide full legal names and current contact information for both the lender and borrower. If either party is a business, include the business name and legal structure. Be specific about who is lending money and who is receiving the loan.

  2. 2

    Specify the Loan Amount

    Clearly state the principal amount being loaned. Write the amount in both numeric form and written out to avoid any ambiguity. Include the date the money is being disbursed or received by the borrower.

  3. 3

    Set Interest Rate and Calculation

    Determine whether the loan will accrue interest and at what annual percentage rate. Specify how the interest is calculated and when it accrues. Research your state's usury laws to ensure your rate complies with legal limits on interest.

  4. 4

    Create the Repayment Schedule

    Define how frequently payments will be made (monthly, quarterly, etc.), the amount of each payment, and the total number of payments. Include the specific due date for each payment. You can also include provisions for prepayment without penalty.

  5. 5

    Sign and Notarize

    Have both the lender and borrower sign the promissory note and date it. Consider having the signatures notarized to add legal protection and verify the identities of the signers. Each party should keep a signed copy of the document.

Legal Considerations for US Promissory Notes

A U.S. promissory note is a serious legal document that creates binding obligations. Before you create or sign one, it's important to understand the legal implications and how these American documents are treated under state law. Different jurisdictions have specific rules that may affect your promissory note.

This template is provided for informational purposes and does not constitute legal advice. For complex situations or if you are unsure about your specific case, consult a licensed attorney in your jurisdiction.

Reviewed by legal professionals. The content on this page and the template clauses have been reviewed by licensed attorneys in the United States to ensure accuracy and legal soundness for standard promissory note scenarios.

Secured versus Unsecured Promissory Notes

A secured promissory note includes collateral that the lender can claim if the borrower fails to repay. This collateral might be equipment, property, or other valuable assets. An unsecured promissory note has no collateral and relies solely on the borrower's promise to repay. Unsecured notes carry more risk for the lender since there is no property to seize if the borrower defaults.

Family Loans and IRS Rules

If you are lending money to a family member, be aware of IRS rules regarding family loans. The IRS requires a minimum interest rate on family loans, and without proper documentation, the loan may be treated as a gift for tax purposes. This can trigger gift tax implications for the lender and may be treated as income to the borrower. Always document family loans properly and consider consulting a tax professional.

State Usury Limits and Interest Rates

Each state has different rules about the maximum interest rate that can be charged on loans. These limits are called usury laws and are designed to protect borrowers from predatory lending practices. If you charge an interest rate higher than your state allows, the promissory note may be unenforceable and you could face penalties. Always research your state's current usury limits before setting an interest rate.

Frequently Asked Questions

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Formalize any U.S. loan with a professional promissory note. Our American template handles all the legal details so you can protect your interests with proper documentation.

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