Using various documents to transact business has become common among people. Document like loan agreement promissory note that promises to pay a certain amount at a future date is an example of such documents. Those who borrow and receive goods accept to pay the lender within the agreed period.
The one who owes money issues and signs a document called a promissory note. The document is only a promise to pay. Another document called loan agreements is more detailed and has both terms and conditions on it. Both parties are required to sign the deed to show they have accepted these conditions.
When repaying the dept, the borrower is usually charged a certain amount of money. This charge is normally called interest and is usually calculated as a percentage of the principal amount. The interest can be paid after every one month, every three months or every six months.
The term of these notes is usually agreed upon by the parties and can even cover more than ten years in case of loans. The document gives details of what a lender should do in case the borrower does not honor the conditions agreed upon. The security is the property or asset the borrower would transfer to the lender in case he does not repay the money as promised.
The documents show the purpose of the borrowed money, amount of money borrowed, period of time to repay, interest rate charged, security provided and the repayment schedule. Signing of the document by both parties seals this contract. Some documents may also require the signature of a guarantor who would take responsibility of honoring the deed in case the borrowing party is totally unable to repay.
Before using Loan agreement promissory note, it is necessary to know their purpose and how they function. Such documents are severally used by banks and business people. The importance of these documents is that they can be used as future evidence in case of a dispute between the parties.
The one who owes money issues and signs a document called a promissory note. The document is only a promise to pay. Another document called loan agreements is more detailed and has both terms and conditions on it. Both parties are required to sign the deed to show they have accepted these conditions.
When repaying the dept, the borrower is usually charged a certain amount of money. This charge is normally called interest and is usually calculated as a percentage of the principal amount. The interest can be paid after every one month, every three months or every six months.
The term of these notes is usually agreed upon by the parties and can even cover more than ten years in case of loans. The document gives details of what a lender should do in case the borrower does not honor the conditions agreed upon. The security is the property or asset the borrower would transfer to the lender in case he does not repay the money as promised.
The documents show the purpose of the borrowed money, amount of money borrowed, period of time to repay, interest rate charged, security provided and the repayment schedule. Signing of the document by both parties seals this contract. Some documents may also require the signature of a guarantor who would take responsibility of honoring the deed in case the borrowing party is totally unable to repay.
Before using Loan agreement promissory note, it is necessary to know their purpose and how they function. Such documents are severally used by banks and business people. The importance of these documents is that they can be used as future evidence in case of a dispute between the parties.
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