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Promissory note

A promissory note is a written promise to repay a loan. It records who borrowed, how much, at what interest rate, when payments are due and what happens if they stop. A handshake can work between friends until it does not; the note is the version of the agreement that survives a disagreement or a tax question.

This builder makes a simple installment note for a private loan. It is not a mortgage, a student loan or a payday loan, and it does not contain the disclosures a licensed lender must give. If you are lending money as a business, or the loan is secured by a house, a lawyer should review the terms.

Written by Nora Whitfield, editorial lead. State rules checked by Samuel Okafor, rules editor, on October 20, 2026.

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Filled sample, Tennessee

Promissory note

STATE OF TENNESSEE

This promissory note is made on October 5, 2026 between Caleb J. Morgan, of 49 Ridge Road, Franklin, TN 37064 (the borrower), and Hannah R. Patel, of 610 Willow Street, Nashville, TN 37203 (the lender). The borrower promises to pay the lender the principal sum of $12,000.00 (Twelve thousand dollars), together with interest at the annual rate stated below. The laws of the State of Tennessee govern this note.

1. Interest

Interest accrues on the unpaid principal at the annual rate of 6.25 percent, simple interest, not compounded. Interest begins on October 5, 2026 and is calculated on the unpaid balance. If the rate is zero, no interest is charged.

2. Payments

The borrower will pay $450.00 monthly, beginning on November 5, 2026, until the loan is paid in full. Each payment is applied first to any late fee then due, then to accrued interest, then to principal. The borrower may pay by a method the lender reasonably accepts, and the lender will give a receipt on request.

3. Maturity

The entire unpaid principal and accrued interest are due on October 5, 2028. If the payment schedule leaves a balance on that date, the borrower will pay the balance in one final payment.

4. Late payments

If a payment is more than 10 days late, the borrower will pay a late fee of $25.00, in addition to the payment then due. The lender may accept a late payment without giving up the right to charge a late fee on a later payment.

5. Prepayment

The borrower may prepay all or part of the principal at any time without penalty. A prepayment is applied to the principal after any accrued interest then due.

6. Collateral

This note is secured by the following property: 2018 Ford F-150, VIN 1FTEW1EP7JFA12345, together with its keys and title.. The borrower grants the lender a security interest in that property. The lender must perfect the security interest in the manner the state requires, such as a title notation or a filed financing statement, before the collateral can be repossessed or sold.

7. Default and remedies

The borrower is in default if a payment is not made within 10 days after its due date, if the borrower files for bankruptcy, or if the borrower sells or hides the collateral without the lender's written consent. After default, the lender may demand payment in writing. The lender may also sue for the unpaid balance and, for secured collateral, repossess and sell it only in the manner state law allows. The lender will apply the sale proceeds to the balance and account to the borrower for any surplus.

8. Waiver and notices

The lender may waive a default once without waiving the right to treat a later default as a default. Notices under this note must be in writing and sent to the addresses above, or to a new address a party gives in writing. The borrower waives presentment, demand and notice of dishonor to the extent state law allows.

9. Entire agreement

This note is the complete agreement about the loan. A change must be in writing and signed by both parties. If any part is unenforceable, the rest remains in effect. The laws of the State of Tennessee govern this note.

Borrower

Borrower

Signature

Printed name: Caleb J. Morgan

Date

Lender

Lender

Signature

Printed name: Hannah R. Patel

Date

Signing requirements: Tennessee: A notary is not required. No witnesses are required. A promissory note needs no notary or witnesses. The interest rate must fit the state usury limit.

Source: UCC Article 3 and state contract law, Tennessee.

Generated from a PaperDeed template. PaperDeed is not a law firm and this is not legal advice. Template review date: October 20, 2026.

Example answers, not advice. The builder replaces them with yours.

Full sample below

Use this form when

  • Lending money to a friend or family member and wanting the repayment terms in writing.
  • Borrowing from a relative to buy a car, pay a deposit or cover a short-term expense.
  • Documenting a seller-financed sale of equipment or a small business asset.
  • Formalizing a loan between two small businesses that are not banks or licensed lenders.

Have this ready

  • Both parties' full legal names and addresses.
  • The amount borrowed and the date the money changes hands.
  • The annual interest rate, even if it is zero. A zero-rate note should say so.
  • The payment amount, frequency and first payment date, plus the final maturity date.
  • Any collateral, and whether the borrower may pay the loan off early.

Build the promissory note

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Step 1 of 4

Lender and borrower

Use the names on the bank accounts and identification. A note with a nickname can be hard to enforce.

Download this promissory note

PDF for printing and signing. DOCX so you can edit it in Word or Google Docs. This form is included for every state.

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What the form includes

Promise to pay

The borrower's unconditional promise to repay the principal and interest.

Interest

The annual percentage rate, stated plainly, with a zero-rate option.

Payment schedule

Payment amount, frequency, first payment date and maturity date.

Late fee

A stated late charge and a grace period, or a statement that no late fee applies.

Collateral and default

Optional security, what counts as default, and what the lender may do.

Signatures

Borrower signature, lender acknowledgment and a notary block when the state requires it.

After you sign

Move the money after the note is signed

Sign the note first, then transfer the funds. Keep the transfer receipt with the signed note. If you pay cash, write a receipt with the date and amount and have both parties sign it.

Keep a payment record

A simple ledger of date, amount and remaining balance prevents most disputes. Send a receipt for each payment, especially cash. The note itself should say how payments are applied, first to late fees, then interest, then principal.

Record a secured note

If the note is secured by a vehicle, the lender may need to be listed on the title. If it is secured by real estate, a mortgage or deed of trust is the usual document, and a lawyer should prepare it. A promissory note alone does not create a public lien.

Deal with a missed payment early

Send a written reminder with the amount due and the date. If the borrower cannot pay, a written modification is better than an informal pause. Keep the original note and any modification together.

Signing rules for this form

The builder shows the rule for every state and adds the right signature block. These state guides go deeper on the four biggest searches.

TNNo notaryRules cited

Tennessee: A notary is not required. No witnesses are required. A promissory note needs no notary or witnesses. The interest rate must fit the state usury limit.

UCC Article 3 and state contract law, Tennessee

Detailed state guides are not published for this form yet. The builder still applies the signing rule for all 50 states and DC, with a citation to the statute or state form for each one.

Rules reviewed October 20, 2026. Every rule names its statute or state form, and the citation links to the official text where the state publishes it online.

Questions people ask

Does a promissory note need to be notarized?

No state requires notarization for a promissory note between private parties. A notary can still help prove the signatures and the date, and a lender may ask for one before buying or enforcing the note. The builder adds a notary block when the state rule calls for it.

What interest rate can I charge?

Each state sets a usury limit, and the limit can depend on the type of lender and the size of the loan. A private loan at a modest annual rate is usually safe. If you are lending as a business or charging a high rate, have a lawyer check the limit in the borrower's state.

What happens if the borrower does not pay?

The lender can demand payment, charge the stated late fee, and if the note is secured, take the collateral after following the state's process. For an unsecured note, the lender's main tool is a lawsuit. A written note with clear terms makes that process much easier.

Can I change the note later?

Yes, if both parties agree in writing. Sign a dated amendment that refers to the original note and states exactly what changes. Do not write over the original or keep the change only in a text message.

Is forgiven debt taxable?

Usually the borrower has income when a lender forgives a debt, unless an exception applies. The lender may have to file a form. This is a tax question, not a form question; ask a tax professional before forgiving a balance.

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Before you use this document

PaperDeed is not a law firm and does not provide legal advice. We provide self-help templates and general information about signing rules. If you are unsure whether a document fits your situation, talk to a licensed attorney in your state.

Every signing rule above names its statute or state form, and links to the official text where the state publishes it online. Rules updated October 20, 2026.

PaperDeed is a self-help service. Templates and state rules were reviewed on October 20, 2026. 5 background guides are available if you want the explanation behind the form.