In North Dakota, a Promissory Note is a standard agreement between two parties, the lender— the person providing the loan—and the borrower, who is the person receiving the loan. These notes define the terms of the agreement, such as payoff amount with interest and penalty for failure of repayment.
North Dakota recognizes both secured and unsecured promissory notes.
North Dakota Secured Promissory Note
Secured promissory notes require the borrower to provide collateral in exchange for a loan. If the borrower fails with repayment, ownership of the collateral goes to the lender.
North Dakota promissory notes have a usury rate – the max interest rate – of 6% per annum, as outlined by North Dakota Century Code Chapter 47-14-09.
Secured promissory notes are easy to fill out. You can download a free promissory note template North Dakota right off the internet. You will need to include:
- Date of contract
- Personal information of lender and borrower
- Loan amount
- Interest rate
- Payment (number of payments, due date, price)
- Late fees
- Collateral offered if the contract is forfeited
North Dakota Unsecured Promissory Note
Unsecured promissory notes don’t require the borrower to offer any collateral to obtain the loan. The Lender and the Borrower work out the agreements of the loan based on good faith.
Using an unsecured promissory note puts the lender at a higher risk of ending up with the short end of the stick in regards to a Borrower failing with repayment. You typically see these types of loans used between family members or friends who know each other. If a borrower defaults on an unsecured promissory note, the lender will have to take the case to Small Claims Court to recover their losses.
Writing an unsecured promissory note is as easy as downloading a free North Dakota promissory note form from the internet. You should be able to complete a promissory note North Dakota form in under ten minutes as long as you have all the information ready.