Virginia Promissory Note: Its Essence and Crucial Details to Include
Are you looking forward to owning your dream car yet having no cash? Worry no more, as there are numerous options to finance high-profile purchases such as a car. By signing a promissory note, you can secure a loan and pay in installments.
But what makes a promissory note? A promissory note has terms and legal obligations that each party should fulfill. So, before you sign that note, ensure you read and understand the terms, so you faithfully meet your obligations.
Here we’ll talk about what to include in a Virginia promissory note.
An Overview of Virginia Promissory Note
A Virginia promissory note is a written contract highlighting the terms of a lending arrangement between a borrower and lender. Most importantly, the borrower writes a promise to reimburse the lender in a timely and well-defined structure.
Typically, a promissory note template contains essential elements, including interest rates, payment information and implications for nonpayment.
If you sign a Secured Virginia Promissory note, you’ll be required to assign a specific valuable property as collateral. You should provide an accompanying description of the property, including its value, condition and location. The law grants the lender the legal right to take the property if you default on the payment.
On the other hand, an Unsecured Virginia Promissory note doesn’t have assigned collateral. The lender relies on your written promise to recover the loan balance. If you default on the payment terms, the lender can only seek legal redress. Although an unsecured promissory note offers no collateral to the lender, it can affect your credit rating for future loans.
Virginia Usury Rates
Different states in USA apply their legislation to regulate usury laws. In Virginia, promissory lending rates are subject to Title 6.2 of the Virginia Statutes. Under Section 6.2-301 of the Statute, the maximum legal rate remains 6% per annum. If you have a written contract, your interest rate may not exceed 12% per year.
Elements of a Valid Promissory Contract
Before you sign a promissory note, you should be clear on your intent for having the contract. For instance, if you intend to sign an unsecured contract, write the title “Unsecured Virginia Promissory Note” on the letterhead.
In addition, a valid promissory contract contains the following essential elements:
The Principal Amount
The principal amount is the total loan amount you receive from the creditor without the interest charged. Write the principal amount in US Dollars and ensure that the figure contains no typing errors.
The Virginia promissory note has a provision for the legal names of all parties. These include the lender, borrower and cosigners.
Your template should include the mailing addresses of all parties involved in the transaction. Typically, mailing addresses have the city, state and zip codes.
A promissory template must have the date of the contract and when it begins. The lender uses the date to determine critical timelines such as repayment schedules and maturity dates.
It closely follows the issuance date and specifies when you should complete your loan without further default.
The collateral is a handy requirement for a secured promissory agreement. Describe the assigned item and provide a physical address to its current location for easy retrieval.
Do you have an agreed interest rate? Please include it in writing when filling out the Virginia promissory note template. Note that the interest rate shouldn't exceed Virginia's maximum usury requirement.
A promissory note must have the signature of the borrower and cosigners to become valid. Real estate transactions also require notarization on top of your signature.
If you want a Virginia promissory note, you don’t need to hire an attorney. Simply download a free printable sample from our website.