There are times when friends or members of the family lend money to those who are close to them in good faith. Oftentimes, there is no document created to cover the transaction. A blank promissory note is the best way to ensure that the lender’s interests are legally protected and the borrower’s obligation to repay the loan can be enforced. Notice that in the absence of a legally valid document, the lender is running a huge risk and if the borrower simply refuses to pay, there can be little or no legal recourse available to the lender to collect.
The blank promissory note is not an exhaustive document and can be drawn up quickly. This simple form of securing the lender’s interests has been in vogue for several centuries now though the format itself has undergone minor modifications in tune with the times. This document should carry the name of the lender as well as the borrower and mention the amount that is borrowed. The lender and the borrower signs the document and instantly, it becomes a valid document enforceable in every state across the nation and in most parts of the world too.
In modern times, the blank promissory note has been modified to carry a few more relevant details such as the interest charged, the amount that the borrower should pay at the end of the specified period, monthly payments if planned, the date on which the monthly payments are due, and mode of paying the monthly payment. However, this modified format is largely employed by professional lenders like banks and corporate. The simple format earlier mentioned is considered appropriate when only two individuals are involved in the transaction.
Given the complexities of collecting debt in modern times, blank promissory note may also contain details of the action that lenders can take in case default in monthly payments and/or the loan itself. This section can also cover areas like cost of collection and collateral security when offered against the loan.
As a borrower if you are called upon to sign a blank promissory note, you can acquaint yourself with all the details, by examining appropriate templates or samples available through the internet. This way, you can position yourself as an informed borrower and identify any potential trouble spots in the document quickly. As in the case of every other financial transaction, the onus of comprehending every word in the document and its impact under different circumstances is entirely on the borrower. With a wide range of helpful websites offering information on virtually every subject under the sun, there can be no reason why borrowers should suffer for want of focused assistance. The lender would anyway ensure that his interests are secured but as a borrower it is not always essential to sign on the dotted lines because you need a loan.