A written and signed promise to repay a sum of money in exchange for a loan or other financing. It's a legally binding agreement that typically includes debt repayment terms, such as payment schedules and interest rates. Promissory notes are less formal than a loan agreement and are suitable for smaller sums of money.
Promissory notes are typically issued by anyone lending money, such as home sellers, credit unions, mortgage lenders, and banks. They can protect both the borrower and the lender by outlining the loan terms and helping to avoid misunderstandings.