Promissory Note Forms, Installment Agreements, Loan Agreement

Q. How do I obtain my loan agreement from this web site?
A. Click one of the buttons to your left (Promissory Note Agreement, Installment Payment Agreement, or Security Pledge), complete the simple interview process, pay for your customized form (which will be immediately e-mailed to you), print and have both parties sign the agreement.

Q. Who needs a promissory note?
A. 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.

Q. What is the difference between a promissory note and an installment agreement?
A. 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.

Q. Should I use a security pledge?
A. 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.

Q. What is the difference between a "Perfected" security interest and an "Unperfected" security interest?
A. A "security interest" is simply a legal right a lender has to seize property pledged as collateral by the borrower. The purpose of creating a security interest is to help protect the lender against the possibility that the borrower will fail to pay back the borrowed money. If that happens with a secured loan, the lender has a legal right to seize the collateral and use the value of it to pay off the loan. An "unperfected" security interest is one in which the lender has a written document granting a security interest in the borrower's collateral, but no public notice has been given of the lender's security interest. The risk with an unperfected security interest is that a third party could come along and buy the collateral from the borrower without realizing that a lender had a security interest. In that event, the lender's security interest is useless against the third party's superior claim to the newly-purchased collateral. The only way a lender can protect against a third party purchase of the collateral is to "perfect" the security interest by making it a matter of public record. This is done in the case of mortgages by recording the mortgage (a mortgage is a fancy name for a security interest in real property) in the county recorder's office. A lender can perfect a security interest in a vehicle by placing his or her name on the vehicle title as a lienholder (some states may have extra requirements, check with your local DMV). And, a lender can perfect a security interest in any other tangible personal property (like furniture or other untitled property) by filing a UCC-1 financing statement with the State in which the property is located. The security pledge agreement sold on this web site creates an unperfected security agreement; if you want to perfect the security interest, please read on.

There are three main types of property that may be perfected with a security agreement. Please find the type of property below.

Real Property: We cannot advise you as to whether our Pledge of Security and Installment Payment Agreement would work as effectively as a more traditional mortgage. Our Security Agreement is not intended to be used on real property, but rather on personal property such as vehicles, art, furniture and equipment.

An alternative suggestion would be to call a local title company and explain what you want to do. This is the ONLY way to ensure your interest will be perfected. It will cost more than our document, but is probably worth the extra cost for that legal protection.
Vehicles: A lender can perfect a security interest in a vehicle by placing his or her name on the vehicle title as a lienholder (some states may have extra requirements, check with your local DMV).
All Other Tangible Property: You will need to file a UCC-1 financing statement with the state in which the property is located. Unfortunately, we cannot currently help you with this form or process. The easiest way to find information about the UCC-1 in your state is to do a web search for your state's UCC-1 site (Ex: you would search for Alabama UCC-1 financing statement if the property was located in Alabama). You should be able to find information about filling out and filing the form easily this way.