Promissory Note Template With Amortization Schedule Example

As a business owner or individual, you may find yourself in a situation where you need to borrow money from a lender or investor. In such cases, a promissory note is a crucial document that outlines the terms of the loan, including the repayment schedule, interest rate, and any other conditions. In this article, we will explore what a promissory note template with an amortization schedule is, its importance, and provide an example.

What is a Promissory Note?

A promissory note is a written agreement between a borrower and a lender that outlines the terms of a loan. It is a legally binding document that specifies the amount borrowed, the interest rate, the repayment schedule, and any other conditions. A promissory note is often used in business and personal finance to secure a loan or investment.

Why is a Promissory Note Important?

A promissory note is essential for several reasons:

1. Clear Terms: A promissory note provides clear terms and conditions of the loan, including the repayment schedule, interest rate, and any other requirements.
2. Protection: It protects both the borrower and lender by outlining their obligations and responsibilities.
3. Evidence: A promissory note serves as evidence of the loan agreement, which can be useful in case of disputes or litigation.
4. Record-Keeping: It provides a record of the loan, including the amount borrowed, interest rate, and repayment schedule.

What is an Amortization Schedule?

An amortization schedule is a table that outlines the repayment schedule of a loan, including the amount of each payment, the interest paid, and the principal balance remaining. It shows how much of each payment goes towards interest and principal, and how the loan balance decreases over time.

Why is an Amortization Schedule Important?

An amortization schedule is essential for several reasons:

1. Repayment Planning: It helps the borrower plan their repayments and understand how much they need to pay each month.
2. Interest Savings: By showing how much interest is paid each month, an amortization schedule helps borrowers understand how much they can save by paying off the loan early.
3. Budgeting: It provides a clear picture of the loan repayment schedule, making it easier for borrowers to budget their finances.

Promissory Note Template with Amortization Schedule Example

Here is an example of a promissory note template with an amortization schedule:

Promissory Note

This Promissory Note ("Note") is made and entered into on [DATE] ("Effective Date") by and between [BORROWER'S NAME] ("Borrower") and [LENDER'S NAME] ("Lender").

Loan Terms

1. Loan Amount: The Lender agrees to lend the Borrower the sum of $10,000 (the "Loan").
2. Interest Rate: The Borrower agrees to pay an annual interest rate of 6% on the Loan.
3. Repayment Schedule: The Borrower agrees to repay the Loan in monthly installments of $188.71, beginning on [START DATE] and ending on [END DATE].
4. Amortization Schedule: The amortization schedule is attached as Exhibit A.

Amortization Schedule (Exhibit A)

Month	Payment	Interest	Principal	Balance
1	$188.71	$50.00	$138.71	$9,861.29
2	$188.71	$49.23	$139.48	$9,721.81
3	$188.71	$48.46	$140.25	$9,581.56
...	...	...	...	...
60	$188.71	$10.19	$178.52	$0.00

Gallery of Promissory Note and Amortization Schedule Examples

Promissory Note and Amortization Schedule Examples

We hope this article has provided you with a comprehensive understanding of a promissory note template with an amortization schedule. Remember to always use a clear and concise template, and to review the terms and conditions carefully before signing. If you have any questions or need further assistance, please don't hesitate to ask.