Who needs a promissory note?
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 in a promissory note or an installment agreement.

What is the difference between a promissory note and an installment agreement?
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  Use our monthly calculator to figure out what the monthly payments on your loan will be.

Should I use a security pledge?
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.

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