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Glossary term

Promissory Note

Definition

A promissory note is the written, signed promise to repay a loan under specific terms.

Technical definition

A promissory note is a legal instrument in which a borrower commits to repay a stated principal amount, with interest, according to defined terms.

Why it matters

The promissory note is the core document spelling out exactly what you owe and how you must repay it, so it's worth reading carefully before signing.

Example

The note for a farm loan states the amount borrowed, the interest rate, the payment schedule, and what happens on default.

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