If you are asked to make a personal loan, a promissory note will serve as a written contract that will protect you and help you to recover the money if the borrower fails to pay you back. A promissory note or loan contract will also serve as written proof of the personal loan should you need to sue the borrower in small claims court to get your money back.
Type the promissory note. A typed promissory note is more professional and easier to read. You do not want the person who borrowed from you to claim that he did not understand the terms of the personal loan contract because it was illegible.
Include the date of the loan and the date the loan should be repaid. This gives the borrower a clear window of time in which to come up with the money to pay you back. A promissory note contract without a set repayment date may allow the borrower to legally languish for years without repaying the money you lent.
Document that you are the person lending the money and name the person borrowing the money. Later on it could be easy to say that the money was really borrowed for someone else or that you were not the original lender. By putting this information in your promissory note or contract, you ensure that both parties involved in the personal loan are clearly identified.
Document how the loan will be repaid. If you want the borrower to repay you in one lump sum, you must put that in the promissory note. If, however, you would rather she pay you in installments and include interest with each payment, you must document that in writing.
Insert a note stipulating that by signing, the borrower agrees that a legal remedy may be sought if he fails to honor the terms of the promissory note.
Document clearly within the personal loan contract any interest charges.
Sign the promissory note and obtain the signature of the borrower front of a notary public. Having the private loan agreement notarized will prevent the borrower from ever being able to argue that his signature on the legal document was forged.