Frequently Asked Questions

What are some different forms that payment methods for promissory notes can take?

Promissory notes offer a variety of payment methods, providing flexibility to both the borrower and the lender. One common form of payment is a lump sum, where the borrower repays the full amount in a single payment. This method is often used when the borrower anticipates having the funds to repay the loan in full at a specific future date. Another form of payment is the "due on demand" method. In this case, the borrower agrees to repay the loan whenever the lender demands it, given a reasonable amount of time before the demand is made. This method provides the lender with more control over the repayment schedule, but it also requires the borrower to be prepared to repay the loan at any time. In addition to these methods, promissory notes can also include more complex repayment structures. For example, a promissory note could specify a loan of $10,000 with a 5 percent interest rate, to be repaid at $250 per month until the loan is paid in full. Alternatively, a promissory note could specify a loan of $1,000 to be repaid as $1,200 after 24 months.