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Promissory Note Credit Schedule

What is Promissory note?

A Promissory Note is a legal document or instrument through which a party makes the promise in writing to pay a particular amount of money to the other party at a particular time or in intervals as is determined by both. This is a general practice for new companies for their startup funds. A Promissory Note has several important information or pointers that it must have. As is obvious in any legal document, it has to have the basic details like the date and the names and addresses of both parties. Between individuals, such notes are also useful for taxation and record purposes. It can also be combined with security agreements like mortgages.

Repayment Schedule –

One of the most important points in the document would be the repayment schedule with proper dates and interest rates too. If the borrower is unable to or defaults on any payments, it is up to the lender. There might be a clause increasing the interest rate. Or the lender could also report him to a credit bureau. If not, he or she still has the right to file a suit at the small claims court. Either of the above affects the borrower’s credit rating or credit score.

The lender may also transfer the note to another party with the knowledge of the borrower. However informal the loan might be it becomes a legal contract if both parties sign a promissory note. Though laws differ from country to country this note still has the basic meaning and idea behind it.

 

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