A promissory note is a financial instrument that comes into play at the time of borrowing money. It is basically a legal document which states that the borrower promises to pay the lender a specific sum at a specific date or on-demand. To know more about it, click on the link given below: https://efinancemanagement.com/sources-of-finance/promissory-note

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eFinanceManagement.com
https://efinancemanagement.com/sources-of-finance/promissory-note
Promissory Note

2. 1. Meaning
2. When to Use?
3. What it Includes?
4. Parties to Promissory Notes
5. Features
6. Types
7. Reference
Content

3. A promissory note is a financial instrument that comes into play at the time of borrowing money. It is basically a legal
document which states that the borrower promises to pay the lender a specific sum at a specific date or on-demand.
Meaning

4. This note comes into play when giving or taking a loan. It could be any type of loan, be it a car loan, student loan,
mortgage, personal loan, business loan, working capital financing, or more. One could use this note even when they give
money to a friend or a relative.
When to Use?

5. A usual promissory note includes the following points:
• Name and address of both the parties.
• The amount that the borrower gets from the lender and time.
• The interest, if any, payable against this borrowing.
• Details of the collateral, if any, offered against this loan.
• Whether the borrower will pay back in one lump sum, weekly or monthly, or in any other way or installments.
• When the borrower makes the repayment, the amount he or she needs to pay, and the mode of payment.
• Signature of lender and the borrower.
• Date and place when the document is signed.
• Witness, if any.
What it Includes?

6. Promissory notes primarily include three parties. These are:
1. Drawer
2. Drawee
3. Payee
Parties to Promissory Notes

7. Following are the important features of a promissory note:
• It could be in writing, or in print.
• It is a promise from the borrower to pay the money on a specific date or when the lender asks.
• Such a document includes the signature of both parties and is stamped.
• It is an unconditional promise.
• The payment must be made in the common legal currency.
• The note contains all the details needed to determine what the transaction was and what the two sides agreed on.
• It can be issued by financial institutions, or by small companies or individuals.
Features

8. Following are the types of promissory notes:
1. Simple
2. Demand
3. Personal
4. Commercial
5. Real Estate
6. Investments
7. Secured
8. Unsecured
Types

9. Reference
To know more about it, click on the link given below:
https://efinancemanagement.com/sources-of-finance/promissory-note