Free Alabama Promissory Note

Understand The Requirements of a Promissory Note in Alabama

Whenever two parties make a financial transaction involving borrowed money, they may opt to formalize their transaction. In Alabama, promissory notes are legally binding and enforceable in court if the borrower breaches the terms agreed.

Here’s how to write a simple promissory note in Alabama and other essential details worth noting.

Promissory Notes in Alabama

The Alabama Code, Title 7 and 8, grants the right to create an enforceable promissory note. According to the code, a promissory note is a formal agreement between two parties memorializing how a borrower will pay a loan. The note is a commitment that the borrower will pay back on the agreed date and at a well-defined interest rate.

Depending on the terms, a free Alabama promissory note for borrowing money may be secured or unsecured.

A secured note compels the borrower to include collateral security in the agreement. Thus, the borrower must give up ownership of the property in case of non-payment.

On the other hand, an unsecured note does not impose liability on the borrower. So, if the borrower fails to pay, the lender can only seek alternative legal procedures.

How Much Interest Can You Charge?

If you are a lender, the Alabama usury laws put a cap on the maximum interest you can charge the borrower. Under Title 8, the maximum interest rate for promissory notes not exceeding one year is 6%, whereas those exceeding one year charge 8%. Moreover, for you to charge interest, the transaction must not be less than $100.

Writing a Promissory Note in Alabama

When writing a promissory note in Alabama for lending money, first decide on the type of note. Do you prefer a secured or unsecured promissory note? And still, if a property is a collateral, include a detailed description of the property.

The Basic Elements

Once you determine the type of the note, you can include the relevant elements. Generally, an Alabama promissory contract contains the following details:

    • The date of creating the note
    • The borrower’s name and mailing address
    • Your name and mailing address
    • The amount of money you are lending
    • The interest rates

Repayment Terms

A free Alabama promissory note for money owed has specific repayment terms that define the lender’s interest. They include:

    • Installment terms such as biweekly or monthly
    • The number of installments to complete the loan
    • The amount of each installment
    • The due date of payment
    • Penalty for late payment
    • Payment modes such as checks or money orders

    Additional Clauses

    An Alabama promissory note includes additional clauses that define the rights and duties of each party. Whether you are making a secured or unsecured note, be sure to include the following provisions:

    Default Interest

    How much interest will the borrower pay in case of default?

    Payment Allocation

    The clause defines how you’ll allocate specific payments to principal and interest.


    Some promissory notes for cash advances may have a penalty if the borrower pays before the due date. Therefore, you should clearly define whether an early payment will attract a penalty.

    Attorney’s Fees

    If you file a claim against default, you should define who will cater to the cost of attorney fees after the suit. Will you both cater to the attorney fees?

    Conflicting Terms

    A promissory note for cash loan should allow for an amendment if there are any conflicting terms between the lender and the borrower.


    The clause allows the promissory note to remain effective if any clause within the note is enforceable.


    Whether creating a secured or unsecured note, an Alabama promissory note should include the borrower’s signature. Often, where the borrower has a cosigner, the note should consist of the cosigner’s signature and the date of signing.

    Alabama's laws do not require notarizing promissory agreements, although it may be necessary in case of legal suits.

    Download a free printable Alabama promissory note for vehicle sale or a generic note from our website.