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How to write a promissory note

A written promise to pay a debt is called a "Promissory Note."

Many times a Promissory Note will be known as a Loan Note Agreement, Loan Note, Note Form and even known as an I.O.U.

Most often a Promissory Note is written or prepared by an attorney, bank or lending institution. However, individuals can write their own Promissory Note that will be considered legal and binding as long as the note includes all the specifically needed information.

Include the date of the note clearly at the top of the page as this is the date all the terms are based from. Also, include the amount of the money borrowed or the debt. This will be referred to as the principal sum. This should be written in a numeric form with decimal places and also written out, just as a check would be written. This is to make sure that there is no reason for a misunderstanding of the amount of money to be paid back.

Describe the terms of the note. Be exact in describing if the debt is to be paid on demand, weekly payments, monthly payments, quarterly payments or if there is some sort of a balloon payment due at some point. Include exactly when the first payment will be due, the day, month and year. Also the day and the month that each payment will be due thereafter. State the day, month and year that the final payment will be due and payable. Some notes will include an amortization schedule, which will show each payment and the balance at that time based on the interest rate.

List the interest rate. This should also be written both in a numeric form with a percentage symbol and actually written out. In a description of the interest rate, be clear on whether the interest rate is a fixed rate, meaning that the interest rate stays the same throughout the term of the note or whether the interest rate is adjustable known as an ARM for adjustable rate mortgage. This is usually associated with a home mortgage loan. The interest rates on these loans can increase from time to time according to the makers of the note.

State whether or not this is a secured or unsecured note. Most mortgage loans state on their Notes that the Note is secured by a Deed of Trust. The Deed of Trust would be filed of record, while the Note or Promissory Note is not. At a mortgage home closing, the borrower would be given a copy of the Note signed and that original Note would be returned to the mortgage company or the note holder until the note or debt is paid in full.

Place the name of the note holder on the Promissory Note. This would be the person, persons, company or financial institution that has loaned the money and where or whom the money or debt will be paid back. List the address of where the payments should be sent or mailed. The Promissory Note will be signed by the Borrower and the person or persons borrowing the money. A place should be provided for the Borrower's name to be printed and also signed. This is usually at the bottom of the document or page. If there is more than one Borrower, then all Borrowers must sign the note.


  • A Promissory Note is usually prepared as a legal form, being typed or computer printed, but a hand written Promissory Note is just as legal and binding providing that all the pertinent information is clearly stated within the body of the document. In addition, it must be signed by all Borrowers.