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Promissory Note (Missouri)

Promissory Note Instructions:

To watch the instructions via video click the link below.

On the top box- fill in the dollar amount of the loan. Then fill in the City and State where the loan is made and the Date of the loan.

The first paragraph- enter the Borrower’s name and after residing at enter the Borrower’s full address with city, state and zip code. Next enter the Lender’s name and the address and the amount of the loan with the percentage of interest being charged. After the words interest per -enter whether the interest is being charged is annually, monthly etc.…and then the date on which the interest will begin accruing. 

For example:  the principal sum of $5,000 USD with interest, payable on the unpaid principal at the rate of 5.5%  interest per month, beginning on March 20, 2022.

Interest is the cost of borrowing funds and is calculated as a percentage of the loan. Interest is paid by the borrower to the lender. Most states have usury laws limiting the rate of interest one can charge on small loans. It is recommended that you refer to your individual state laws to ensure that the interest rate you are charging is legal.

Section I- Terms of Repayment: How will the money be paid back.

Pick one of the options of repayment either as a single payment (OPTION 1) amount or if it’s in installment payment (OPTION 2).

OPTION 1-Enter the date that they money will be repaid by.

OPTION 2-enter how the installments payment will be paid, for example will it be weekly, semi-monthly, or monthly and then enter the date that they will be due. For example, 15th of each month. Then you will need to enter the starting date of the repayment schedule and the end date-the date of completion of the repayment.

If you would like to include a grace period enter the number of days of the grace period. If no grace period is being given enter 0.

Put an X through whichever option you are not using.

Section II- Default and Fees: This section discusses what happens in the situation where the borrower defaults. If the Borrower defaults and you want to increase the interest rate, enter the new rate here. If you do not want to increase the rate, enter 0. Then enter the name of the state that you reside in.

You may wonder, why should I increase the interest rate if the Borrower defaults and how much should I increase it by? By increasing the interest rate you are creating an incentive for the Borrower to pay back the loan in a timely manner. You can increase the default interest rate by an amount you see fit, however you must make sure that you are within the limits set by your state’s usury laws

Section III- Security: This section discusses a secure loan, meaning when there is collateral involved. Collateral is an item of value that a lender accepts from the Borrower as protection in case of a loan default.

List or enter the item that is being used for collateral, for example: Chevy Tahoe, 2019, VIN Number: 45464564845.

What can be used for Collateral? Any item of value of personal property, examples include such items such as: jewelry, cars, bank accounts, shares of stocks, and future paychecks. Real Property, such as a home or other real estate is typically not used as collateral in a promissory note. Retirement accounts are also typically not accepted as collateral and should not be used.

Collateral is used in order to make the Lender more secure in his position. If the Borrower does default and does not repay the loan, then the Lender can seize the collateral in order to recoup its losses.  Collateral is mainly used in personal loans when the Borrower is at a high-risk of defaulting on the loan.

If you do NOT want to secure the loan, then enter NOT APPLICABLE on the line for Collateral. However, be aware if no collateral is taken then the Lender will have to go through costly legal proceedings in order to recoup its losses if the borrower defaults.

Section V- Guarantor:  Is there a co-signor or guarantor? If there is, enter the name and address of that person here. A co-signor or guarantor, can be any third-party, such as the Borrower’s relative or friend, who is willing to take on the obligation to ensure that the loan is repaid to the Lender. In the event of a default, the co-signor becomes obligated to repay the loan to the Lender. However, in order for the co-signor to become legally responsible for the loan they must sign the signature section for the guarantor on the promissory note. Typically, co-signors are used when you are making a loan to someone high-risk or with little or no credit.

If there is a co-signor, ensure that they sign the Promissory Note on the line indicated by the signature section of the document.

If there is NO co-signor or guarantor, enter NOT APPLICABLE here and on the signature line indicated for the co-signor at the end of the document.

Section VI-Miscellaneous Provisions:  Enter the State in which this Note is being created, wherever indicated.

Additional Clauses: if there is anything else you would like to include in this form, enter it here.

Signature: Enter the day, month and year that this promissory note will be executed and all parties involved should sign. It is a good idea to have several copies of the document so each party involved may keep a copy with all signatures for their records.

Assignment Page: Only complete this page if any of the repayments are being assigned to another party now or in the future. Otherwise, discard this page.