Promissory Note Indiana: The Important Details You Should Know
A promissory note in Indiana is an indispensable document when lending money, especially if the money has a higher value. The promissory agreement creates legal rights and responsibilities, thus ensuring justice for the borrower and lender.
While drafting the promissory loan agreement, parties should include all the relevant data to make the contract valid. They should also understand their legal obligations as breaching the terms can attract penalties.
Read on to understand what a promissory note in Indiana contains.
Indiana Promissory Note
A promissory note is a written contract binding two parties and containing a promise to pay an agreed sum of money.
Typically, the contract outlines the principal amount, interest rates and penalties for default, among other essential clauses.
A promissory note contract is a security document subject to enforcement under the security laws.
If you wish to sign an Indiana promissory note, you may have two options;
Secured Promissory Note
A secured note promises to pay the loan with guaranteed collateral. Examples of a promissory contract include a mortgage and car loan.
The borrower should offer personal property, real estate, or vehicle as collateral. If the borrower breaches the contract, the lender can possess the valuable item to recover the loan.
Unsecured Promissory Note
An unsecured note doesn’t contain any security to repay the loan. In addition, an unsecured note lasts for a short time and doesn’t have penalties for late payments.
What is the Interest Rate?
Section 24-4.6-1 of the Indiana Code contains laws that regulate interest rates. Under the law, the maximum interest rates for loans less than $50,000 are 21% and 8% for judgment interest rates.
Without a formal, written agreement, the law still requires lenders to observe the 8% annual limit.
Elements of Indiana Promissory Note
Indiana doesn’t have a universally accepted template for promissory note. Mostly, parties sign a DIY contract according to the prevailing situation. However, a promissory note contains essential clauses and elements to make it valid.
The Creation Date
The date for creating the contract appears below the title, starting from the month, day, and year.
The promissory agreement should have the lender and the borrower's legal names and mailing addresses. Moreover, an Indiana secured note contains the borrower’s physical address, which is often useful in helping the lenders to retrieve collateral.
The Principal Amount
An accurate description of the principal amount forms part of the contract, exclusive of the accrued interest.
The lender should express interest rates as an annual percentage within the recommended rate.
Indiana promissory note contain a payment schedule, primarily a monthly installment. Under the schedule, the note should include the number and value of each installment. The payment information also specifies penalties for late payments if applicable.
If the borrower can’t pay the loan, the lender will specify the interest to pay after a default judgment.
The lender should include a clause showing funds allocation to the principal amount and interest.
Some lenders may charge a penalty for the early payment of the loan. Where applicable, the contract should highlight the relevant penalties.
An Indiana promissory note has detailed information on settling attorney costs for legal disputes. Some lenders share the charges with the borrowers, while others require the borrower to pay all the legal expenses.
The clause allows the borrower to continue making loan payments even if the lender is not physically present at the time of payment.
Indiana's laws allow lenders to execute portions of the contract even if some provisions are not enforceable.
If a promissory contract contains conflicting terms, the lender should clarify how to amend the contradictory clauses.
Choice of Law
Since different states have regulations governing promissory note, both parties should agree on the state jurisdiction to oversee the contract’s execution.
Are you wondering where you can get a promissory note in Indiana? You can easily download a free promissory note template from our website at your best convenient time. The process is easy without any complications of visiting an office.