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Guides, tips, and state-specific information about promissory notes and lending transactions.
How to Forgive a Family Loan Without a Tax Surprise
You lent your sister money during a rough stretch, and now you have decided you would rather just let it go. Forgiving the balance is a generous thing to do, but the IRS can treat forgiven debt as a gift, so a little planning keeps a kind gesture from becoming a tax headache. Here is how to forgive a family loan cleanly.
James Stackpoole · June 29, 2026 at 11:17 AM ET 
Is a Promissory Note Legally Binding in North Dakota?
Yes. A properly made promissory note is an enforceable contract in North Dakota, and the state's courts will hold a borrower to it. Here's what makes a note binding, how long you have to sue on it, and where North Dakota's interest-rate rules come in.
Sarah Mccullen · June 28, 2026 at 12:24 PM ET 
What Is a Secured Promissory Note and When You Need Collateral
The difference between a secured and an unsecured note is the difference between a lender who can take something back and one who can only sue and hope. Collateral changes everything about your odds of getting paid, and knowing when to require it is the core lender skill.
Sarah Mccullen · June 26, 2026 at 11:47 AM ET 
How to Sell a Promissory Note You Hold (and What It's Worth)
If you're a private lender holding a note and you'd rather have cash now than payments over time, you can sell it to a note buyer at a discount. Here's exactly what makes a note sellable, how buyers price it, and the paperwork that transfers your rights cleanly.
Sarah Mccullen · June 25, 2026 at 11:53 AM ET 
How to Add a Co-Signer to a Promissory Note
A co-signer can turn a risky loan into one worth making, because a second person becomes fully responsible for the debt if the borrower does not pay. But co-signers often misunderstand what they agreed to, and that misunderstanding is where the relationships break.
James Stackpoole · June 24, 2026 at 11:52 AM ET 
Can Your Spouse or a Family Member Witness a Promissory Note?
You are about to sign a loan to your cousin and someone asks who should witness it, so you glance at your spouse standing in the kitchen. Before you grab the nearest person, it helps to know whether a witness is even required and why a neutral one is worth a little extra effort. Here is the practical answer.
James Stackpoole · June 23, 2026 at 11:14 AM ET 
Balloon Payments on a Promissory Note: How They Work
A balloon payment keeps the monthly payments low by leaving a large lump sum due at the end. It can make a loan affordable month to month, but that final payment has ended more than a few borrowers who never planned for how they would actually cover it.
Sarah Mccullen · June 22, 2026 at 1:43 PM ET 
Using a Promissory Note to Advance Money Against an Inheritance
Your daughter needs help now, and you would rather give it to her while you are alive than make her wait for the estate to settle. A promissory note lets you do that and still keep the eventual split fair among all your children. Here is how to document an advance against an inheritance so it is treated as a loan, not a gift, and so no one fights about it later.
James Stackpoole · June 21, 2026 at 7:24 PM ET 
Is a Promissory Note Legally Binding in Texas?
Texas enforces promissory notes readily, but the state has its own rules that decide whether yours holds up. The usury limits are real and the penalties for crossing them are some of the harshest in the country, and the statute of limitations sets a hard clock on collecting.
James Stackpoole · June 19, 2026 at 2:33 PM ET 
How to Calculate Interest on a Promissory Note
Interest is where promissory notes get confusing, because simple and compound interest produce very different totals, and amortized payments split each one between interest and principal in a way that surprises borrowers. Here is how the math actually works, in plain terms.
Sarah Mccullen · June 18, 2026 at 11:48 AM ET 
Promissory Note vs. Loan Agreement: Which Do You Need?
People use the two terms as if they mean the same thing, then pick the wrong document for the deal. A promissory note is a borrower one-sided promise to pay. A loan agreement is a full two-sided contract. The right choice depends on how complex the deal is and how much you need to spell out.
James Stackpoole · June 17, 2026 at 12:20 PM ET 
What Happens to a Promissory Note in Bankruptcy?
When someone who owes you on a promissory note files for bankruptcy, your loan does not simply vanish, but your odds of collecting hinge on one thing most private lenders never thought about: whether the note was secured. Unsecured lenders are often last in line and may get nothing.
Sarah Mccullen · June 16, 2026 at 12:37 PM ET 
How to Write a Promissory Note for a Car Loan Between Individuals
Selling a car to someone who pays you over time turns you into a lender, and a handshake is a terrible loan. A promissory note spells out the payments, the interest, and what happens if they stop paying, while the title question decides whether you actually get paid.
James Stackpoole · June 15, 2026 at 12:34 PM ET 
Installment vs. Demand Promissory Note: How to Choose
Two promissory notes can lend the same amount at the same rate and still work in completely different ways, because the repayment structure is where the real difference lives. An installment note sets a fixed schedule. A demand note lets the lender call the loan whenever they want. Choosing between them shapes the entire loan.
James Stackpoole · June 12, 2026 at 1:15 PM ET 
Is a Promissory Note Legally Binding in Florida?
Yes, a promissory note is enforceable in Florida when it is properly written, and Florida courts enforce them routinely. But properly written is doing real work in that sentence. A note that misses a basic requirement, or charges illegal interest, can be weakened or thrown out entirely.
Sarah Mccullen · June 11, 2026 at 11:59 AM ET 
What Interest Rate Can You Legally Charge? Usury Limits Explained
Charging interest on a loan is legal and often sensible, but every state sets a ceiling, and crossing it can do far more than void the interest. In some states it costs you the right to collect the loan at all. Here is how usury limits work and how to set a rate that actually holds up.
Sarah Mccullen · June 10, 2026 at 1:14 PM ET 
Secured vs. Unsecured Promissory Note: Which One Do You Need?
Every promissory note answers one question before any other: if the borrower stops paying, what can the lender actually do about it? The answer depends almost entirely on whether the note is secured or unsecured, and a lot of lenders make that choice without realizing what they are giving up.
James Stackpoole · June 9, 2026 at 12:10 PM ET 
The IRS Minimum Interest Rate for Family Loans (AFR Explained)
Charging too much interest can break usury law. Charging too little can create a tax problem with the IRS. The applicable federal rate is the floor you are supposed to meet on a family loan, and getting below it can leave you taxed on interest you never actually collected.
James Stackpoole · June 8, 2026 at 12:07 PM ET 
Does a Promissory Note Mean You Got the Loan?
You applied for financing, went through the process, and now someone has handed you a promissory note to sign. Does that mean you're approved? Is signing the note the moment the loan becomes real, or is it just one more form in a process that could still fall through? The answer matters, because people sometimes treat signing a promissory note as a formality when it's actually one of the most consequential moments in the entire borrowing process...
Sarah Mccullen · June 5, 2026 at 12:26 PM ET 
What Is a Promissory Note in Real Estate?
When you buy a home with a mortgage, you sign a stack of documents at closing thick enough to make your hand cramp. Buried in that stack is the one document that actually creates your obligation to repay the money: the promissory note. Most buyers never read it closely, never get a copy that registers in their memory, and couldn't tell you the difference between the note and the mortgage. But in real estate, the promissory note is the document that matters most, and understanding what it does clears up a lot of confusion about how home financing actually works...
James Stackpoole · June 4, 2026 at 12:14 PM ET 
How to Create a Promissory Note Online (And Make Sure It Holds Up)
You can create a promissory note online in a few minutes, and it carries the same legal weight as one a lawyer drafts. The difference between a note that protects you and one that doesn't comes down to what goes into it. Here's how to get it right.
Sarah Mccullen · June 3, 2026 at 12:29 PM ET 
Who Holds the Promissory Note While It's Being Repaid?
The note is signed, the money has changed hands, and now there's a physical document that represents the debt. Who keeps it? Does the lender hold it? The borrower? Both? A neutral third party? It's a practical question that doesn't get much attention until something goes wrong, and the answer has real implications for how the loan gets enforced, repaid, and ultimately closed out...
Sarah Mccullen · June 2, 2026 at 1:26 PM ET 
Can I Make My Own Promissory Note?
You need to document a loan and you're wondering whether you can just write the promissory note yourself, or whether this is one of those situations that requires a lawyer, a specific form, or some kind of official filing. The good news: yes, you can absolutely make your own promissory note, and for most loans it's the right approach. The catch is that "can" and "should do it carelessly" aren't the same thing.
Sarah Mccullen · June 1, 2026 at 12:06 PM ET 
Does a Promissory Note Need a Witness to Be Valid?
You've drafted the note, both parties are ready to sign, and someone asks whether you need a witness to make it official. Maybe a relative remembers signing important documents in front of witnesses. Maybe you've seen it in movies. The question is reasonable, and the answer surprises a lot of people: in nearly every case, no, a promissory note does not need a witness to be valid...
Sarah Mccullen · May 29, 2026 at 1:13 PM ET 
Can You Change the Terms of a Promissory Note After Signing?
Life changes after a loan is made. The borrower loses a job. The lender needs the money back sooner than expected. Both parties agree the interest rate was too high. Whatever the reason, one or both parties want to adjust the terms of a promissory note that's already been signed, and the question is whether that's even possible and how to do it without creating a legal mess...
James Stackpoole · May 28, 2026 at 12:13 PM ET 
Can a Minor Sign a Promissory Note?
It comes up more often than you'd think. A parent co-signs a loan for a teenager buying a car. A grandparent lends money to an 17-year-old heading to college. A young entrepreneur borrows startup funds before their 18th birthday. In each case, someone is wondering whether a promissory note signed by a person under 18 is actually enforceable, or whether the whole document can be unwound the moment the minor decides they don't want to honor it...
James Stackpoole · May 27, 2026 at 2:01 PM ET 
How to Write a Promissory Note for a $1,000 Loan to a Friend
A thousand dollars feels small until a friend doesn't pay it back. It's not enough to hire an attorney over, not enough to make small claims court feel obviously worth the trouble, but plenty enough to create lasting awkwardness every time you see that person. It's also exactly the amount where most people skip the documentation because it feels like overkill...
Sarah Mccullen · May 26, 2026 at 1:51 PM ET 
IOU vs. Promissory Note: Which One Actually Protects You?
Both documents acknowledge a debt. Both can be written by hand. Both involve one person owing money to another. So what's the actual difference between an IOU and a promissory note, and does it matter which one you use when money changes hands?
Sarah Mccullen · May 25, 2026 at 2:04 PM ET 
Can a Promissory Note Be Counted Against Your Inheritance?
Your parent lent money to your sibling five years ago. Your sibling never paid it back. Your parent just died. Now you're sitting across from an estate attorney trying to understand why the numbers don't add up, and whether that outstanding loan simply evaporates or whether it affects what your sibling receives from the estate...
James Stackpoole · May 22, 2026 at 12:34 PM ET 
Do You Need a Promissory Note when Lending Money to your Parents?
Lending money to a parent is one of the more emotionally loaded financial situations an adult child can navigate. The power dynamic is reversed from what you grew up with. The person who used to take care of you now needs your help, and asking them to sign paperwork feels like rubbing their nose in it. So most people skip the documentation, hand over the money, and tell themselves it will work out...
Sarah Mccullen · May 21, 2026 at 2:00 PM ET