A promissory note with installment payments is a legal instrument that documents one person’s promise to pay a sum of money to another based on a set repayment schedule.
- Loaning money that you that you want returned slowly over time
- Borrowing money under terms requiring regular payments
A promissory note records a financial transaction that involves repayment upon a debt. The promissory note will include all relevant details of a debt, including the date by which the debt must be repaid, any fees or interest that may apply, the parties involved in the transaction, and all other terms and conditions of the loan. Sometimes lenders and borrowers want the repayment terms to be simple and consistent. In these cases, the parties may want to execute a promissory note with installment payments. A promissory note with installment payments documents in writing your intent to repay a loan by making payments over time. The loan is repaid in full at the end of the term so long as the borrower has been up-to-date in installment payments. This type of agreement has clear, simple terms for parties who value certainty and consistency in loan agreements. Promissory notes with installment payments may be negotiated on any payment scale that works for the parties involved. Regardless of whether you are the borrower or the person making the loan, promissory notes are an effective way to formalize a repayment agreement between two parties. Many common financial transactions, such as taking out a mortgage, require a promissory note as a matter of law or best practice, so a promissory note is a financial instrument that everyone should be aware of.