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Q. How do I obtain my loan agreement
from this web site?
A. Click one of the following links (, , or ), complete the simple interview process, pay for
your customized form (which will be immediately e-mailed to
you), print and have both parties sign the agreement.
Q. Who needs a promissory note?
A. Anyone loaning something of value to another person should
put their loan agreement in writing. While many such private
party agreements begin with good intentions on a handshake,
it is simply too easy for one side to forget exactly what
the deal was. This leads to misunderstandings and animosity.
The best way to eliminate arguments is to get the deal in
writing right at the outset.
Q. What is the difference between a promissory note and
an installment agreement?
A. A promissory note is used when the lender expects to be
paid in full on a given date or on demand. An installment
agreement, on the other hand, allows the borrower to spread
the payments out over a given time period and make monthly
payments (installments) to the lender.
Q. Should I use a security pledge?
A. If there is any doubt that the borrower may not pay back
the loan, then it is advisable to use a security pledge. By
doing so, a form of collateral is established so that if the
borrower defaults on the loan, the lender is still "repaid"
with the value of the collateral. Security pledges are required
by institutional lenders like banks, which require a mortgage
on a home before loaning money to buy.
Q. What is the difference between a "Perfected" security
interest and an "Unperfected" security interest?
A. A "security interest" is simply a legal right a lender
has to seize property pledged as collateral by the borrower.
The purpose of creating a security interest is to help protect
the lender against the possibility that the borrower will
fail to pay back the borrowed money. If that happens with
a secured loan, the lender has a legal right to seize the
collateral and use the value of it to pay off the loan. An
"unperfected" security interest is one in which the lender
has a written document granting a security interest in the
borrower's collateral, but no public notice has been given
of the lender's security interest. The risk with an unperfected
security interest is that a third party could come along and
buy the collateral from the borrower without realizing that
a lender had a security interest. In that event, the lender's
security interest is useless against the third party's superior
claim to the newly-purchased collateral. The only way a lender
can protect against a third party purchase of the collateral
is to "perfect" the security interest by making it a matter
of public record. This is done in the case of mortgages by
recording the mortgage (a mortgage is a fancy name for a security
interest in real property) in the county recorder's office.
A lender can perfect a security interest in a vehicle buy
placing his or her name on the vehicle title as a lienholder.
And a lender can perfect a security interest in any other
tangible personal property (like furniture or other untitled
property) by filing a UCC-1 financing statement with the State
in which the property is located. The security pledge agreement
sold on this web site creates an unperfected security agreement;
if you want to perfect the security interest, contact us for
help and instructions.
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