Promissory notes are a type of financial document that shares characteristics with IOUs and legal loan agreements. There will be financial repercussions if the borrower fails to pay back the lender by the agreed-upon deadline, but the borrower would rarely face jail time.
A Missouri promissory note will usually have an interest rate of 8% and cannot exceed 10%, according to the Missouri Code § 75-17-1 as of 2013.
There are two types of promissory notes: secured and unsecured.
Missouri Secured Promissory Note
The borrower will have to pay collateral if they cannot repay the lender. The collateral can be in the form of an asset equal to the amount of the debt owed, such as land, a vehicle, or a boat. The items used to pay back the lender will be stated in the promissory note before all parties sign.
A secure promissory note Missouri form will typically include the following information:
- Date of issuing the secure promissory note
- Borrower’s name and address
- Lender’s name and address
- Amount owed
- Payment deadline
- Types of installments
- Which assets the borrower will use as a security
- Signatures of the borrower, lender, and usually a notary public
Missouri Unsecured Promissory Note
If you look at an unsecured promissory note template Missouri, you won’t find any stipulation that the borrower must offer up an asset should they fail to make payments to the lender. As a result, this type of agreement is less binding.
The lender thus has a harder time making the borrower pay. However, the lender can take the borrower to a small claims court to urge them to repay the full amount designated in the promissory note.