A promissory note is simply an instrument in writing wherein borrower undertakes to pay the specified amount with interest to lender at a specified time.
You need this to legally enforce claim to funds,or access to other remedies,if the borrower defaults.Promissory note contains detail regarding rate of interest and
collateral security(property given in lieu of loan e.g. jewellery). It helps in avoiding any confusion in the minds of both borrower and lender.
When a person issues a promissory note, he/she would have to stamp it as per Indian Stamp Act and normally a revenue stamp is affixed on the promissory note signed by the borrower.
Use this agreement if
You plan to loan money to another person or business, and would like to formalize the agreement.
You are looking to borrow money from a private party or a business, and you would like to get all the terms in writing.
You are involved in a loan that includes interest, and you wish to prepare an amortization table for both parties.
You need a written record determining the amount of a monthly loan payment.
You have been asked to create a Promissory Note on behalf of a lender and borrower to outline the terms of a loan.