Free North Carolina Promissory Note

Do You Need a Promissory Note When Lending Money to a Friend in North Carolina?

If you have offered a loan to someone before, the chances are that you have at some point written an informal IOU. Nonetheless, when lending a large sum of money to a family or friend, it would be best to draft a formal promissory note just like banks and other financial institutions do.

Other than giving you a payment guarantee, a promissory note benefits the borrower by offering them an outline of the interests, repayment terms and other obligations that they should meet. In this article, you will learn how to write an interest-bearing promissory note in North Carolina.

What is a North Carolina Promissory Note?

As the name suggests, a promissory note is a promise in written form by a loan borrower that they will repay debt while meeting all the terms on the promissory note. A promissory letter can also prove that a lender offered a certain amount of loan and expect the borrower to refund it on or before a specific date.

When Do You Need a Promissory Note?

It would be best to draft a promissory note each time you lend someone money, regardless of the amount or how they plan to use it, provided you want them to pay you back. It is also a great idea to sign a promissory letter each time you borrow from someone. Don't assume that you don't need any legal documents because you are closely related. A promissory letter saves you from disagreements at later stage that could potentially ruin your relationship.

There are two main types of promissory notes for personal loans.

Secured Promissory Note:

Secured promissory notes are secured with collateral. For instance, you can take your friend's car or property deed and keep them until they clear their debt. This is a perfect option for large loan amounts.


This promissory note is not secured by collateral. Therefore, if the borrower fails to pay you, you will have nothing to use to recover the loan. But you can file a claim and let the court point out what you can take for the repayment. Unsecured promissory notes are only advisable for small loans.

How to draft a North Carolina Promissory Note for Personal Loan

A valid promissory note should include the following:

    • The current date or the date of issuance
    • The names and addresses of the lender and borrower
    • The amount owed
    • The preferred payment plan could be lump-sum, installment or on-demand
    • The payment period
    • The interest rate

In the case of a secured loan, you should name the collateral and the terms on which the lender should foreclose the collateral. In the case of an unsecured loan, you should include what happens if the borrower doesn't pay on time. For instance, you may want to add a late payment interest, a percentage of the total loan amount.


The promissory note cannot be legally binding without the lender’s and borrower’s signature. Signing shows that both parties agree with the document’s requirements. It is also a confirmation that the borrower is willing to fulfill the stated requirements.

You may also want to include a co-signer and notarize the document, especially in the case of a large loan amount. The co-signer is like a witness who will back you up if the borrower fails to pay.

A promissory note gives you more assurance that a borrower will pay you back because they know what’s at stake if they don’t. But some people shy away from the idea because they feel like drafting the document is tedious and money-consuming. Fortunately, you can now download a free North Carolina promissory note template from our website. The form is already customized as per general requirements and all you have to do is fill in the blanks.