Promissory Note Template
A lump-sum promissory note with simple interest: enter the principal, the rate and the term, and the note calculates the interest and the total due at maturity — right in the text the borrower signs.
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A general template, not legal advice — review it before you use it. Draftmill is not a law firm.
Promissory Note
Principal amount: $15,000.00
Date: October 10, 2026
Place: Austin, Texas
FOR VALUE RECEIVED, the undersigned Michael Reyes, of 1428 Quarry Bluff Lane, Austin, Texas 78704 (“Borrower”), promises to pay to the order of Ellen Brooks, of 6012 Cedar Sage Court, Austin, Texas 78731 (“Lender”), the principal sum of $15,000.00, together with interest as provided in this Promissory Note (the “Note”).
1. Interest
Interest accrues on the unpaid principal balance from the date of this Note until it is paid in full, as simple interest at the rate of 6% per year, computed on the basis of a 360-day year of twelve 30-day months. Interest is not compounded.
2. Payment at Maturity
Borrower will pay the entire unpaid principal balance and all accrued interest in a single payment on October 10, 2028 (the “Maturity Date”), which is 24 months after the date of this Note. If Borrower makes no prepayment, the interest due on the Maturity Date will be $1,800.00 and the total amount due on the Maturity Date will be $16,800.00.
All payments will be made in lawful money of the United States to Lender at Lender’s address stated above, or at any other place Lender designates in writing. Each payment is applied first to any late charges, then to accrued interest and then to principal.
3. Prepayment
Borrower may prepay all or any part of the principal at any time without penalty or premium. After a prepayment, interest accrues only on the principal that remains unpaid. A partial prepayment does not change the Maturity Date.
4. Late Charge
If any amount due under this Note is not received within 10 days after its due date, Borrower will pay a one-time late charge of 5% of the overdue amount, but not more than the maximum permitted by applicable law.
5. Default and Acceleration
Each of the following is an event of default:
Borrower fails to pay any amount under this Note when due;
Borrower becomes insolvent, makes an assignment for the benefit of creditors, or files, or becomes the subject of, a petition in bankruptcy; or
any statement Borrower made to Lender to obtain this loan proves to have been materially false.
Upon an event of default, Lender may declare the entire unpaid principal and all accrued interest immediately due and payable. After the Maturity Date, or after acceleration if earlier, the unpaid principal bears interest at 10% per year until paid in full, but never at more than the maximum rate permitted by law. If this Note is referred to an attorney for collection, Borrower will pay Lender’s reasonable costs of collection, including reasonable attorneys’ fees and court costs, to the extent permitted by law.
6. Waivers
To the extent permitted by law, Borrower and every co-signer, guarantor and endorser of this Note waive presentment for payment, demand, notice of nonpayment, notice of dishonor, protest, notice of protest, notice of intent to accelerate and notice of acceleration. No delay or failure by Lender in exercising any right under this Note waives that right or any other right, and Lender’s acceptance of a late or partial payment does not waive any default.
7. Lawful Interest
Borrower does not agree to pay, and Lender does not intend to charge or collect, interest or other charges in excess of the maximum permitted by applicable law. If any excess is charged or received, it will be applied to reduce the principal or, if the principal has been paid in full, refunded to Borrower.
8. Unsecured Note; Joint and Several Liability; Governing Law
This Note is unsecured. If more than one person signs this Note, including as a co-signer, each of them is jointly and severally liable for the full amount due.
This Note is governed by the laws of the State of Texas, without regard to its conflict-of-laws rules. If any provision of this Note is unenforceable, the remaining provisions remain in effect. This Note may be changed only in a writing signed by Borrower and Lender. Lender may assign this Note; Borrower may not assign its obligations under it.
Signatures
Borrower has signed this Note on the date stated above.
______________________________
Michael Reyes, Borrower
______________________________
Co-signer (if any) — signature and printed name
What it's for
A promissory note is the borrower’s written, signed promise to repay a loan: how much, at what interest, when and where. It is used for personal and family loans, loans between business owners, and seller financing. A note payable to order is typically a negotiable instrument under Article 3 of the Uniform Commercial Code as adopted by each state, and a signed note is itself strong evidence of the debt.
Interest limits come from state usury laws, which differ by state, by type of borrower and by loan amount; the template includes a savings clause that caps all charges at the lawful maximum. Federal tax law matters for low-interest loans, especially between family members: under section 7872 of the Internal Revenue Code, a loan at less than the IRS applicable federal rate can produce imputed interest income and a gift. Check your state’s requirements before you set the rate.
The template is an unsecured note repaid in a single payment at maturity, with simple interest, prepayment without penalty, a late charge, default and acceleration, waivers and a signature line for a co-signer. The interest and the total due are calculated from the values you enter.
What it should include
- the names and addresses of the borrower and the lender
- the principal amount and the annual interest rate
- how interest is calculated, and the total amount due
- the maturity date, and where and how payment is made
- the right to prepay and any late charge
- events of default and the lender’s right to accelerate
- governing law and the signature of the borrower (and any co-signer)
How it works
Add the template
In one click — it lands in your account with a sample project, so you see the finished document right away.
Enter your data
Type each detail once in the project and it fills in everywhere it appears in the document. Formulas compute the amounts.
Export PDF or Word
Download the finished document as a PDF to sign or a DOCX to keep editing. For the next client, just change the data.
Frequently asked questions
What is the maximum interest rate I can charge on a personal loan?
It depends on the state. Usury laws set different ceilings depending on the type of loan, whether the borrower is a consumer or a business, the loan amount and whether the lender is licensed, and some states exempt larger or commercial loans entirely. Charging more than the lawful rate can cost the lender the interest — and in some states the principal or a penalty as well. Check your state’s usury statute before setting the rate; the template’s savings clause limits all charges to the lawful maximum.
Do I have to charge interest on a loan to a family member?
Not legally, but the tax rules expect it. Under section 7872 of the Internal Revenue Code, a loan at an interest rate below the applicable federal rate (AFR) — which the IRS publishes every month for short-, mid- and long-term loans — can be treated as if the lender received the forgone interest as income and gave it to the borrower as a gift. There are exceptions, notably for gift loans between individuals of $10,000 or less that are not used to buy income-producing assets. Look up the current AFR for your loan’s term in the month you make the loan, and ask a tax advisor about larger loans.
What is the difference between a secured and an unsecured promissory note?
This note is unsecured: if the borrower does not pay, the lender has to sue on the note and collect like any other creditor. A secured note is backed by collateral. For personal property, the borrower signs a security agreement and the lender perfects its interest, usually by filing a UCC-1 financing statement or by being recorded as lienholder on a vehicle title; for real estate, the note is secured by a mortgage or deed of trust recorded with the county. Securing a loan takes these extra documents — the note alone does not create a lien.
This template is a general starting point. Draftmill is not a law firm and does not provide legal advice; using a template creates no attorney–client relationship, and we do not guarantee that it is correct or suitable for your situation. Laws differ from state to state — adapt it to your situation, and have important contracts reviewed by an attorney licensed in your state. Terms of Service
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