Q: If I get a loan, do I need a promissory note too?
A:
You can obtain a loan without any paperwork. For example, a co-worker asks to borrow $20 until next Friday. You make the loan and the co-worker pays you back next Friday. No worries. However, it is always a good idea to have some paperwork that documents what took place and what is expected.
Although a promissory note is not required, the person loaning the money will want some type of assurances that the loan will be paid-off. The promissory note, offers some degree of protection to the lender. It also documents the loan took place, and what if any, is the collateral that can be confiscated, if the loan is not paid by a certain time. If you are lender, you want a Promissory Note, to protect your loan.
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