Secured Promissory Note – Includes security, which provides the lender with a layer of protection if the borrower defaults on the balance. In the template, the borrower will be required to enter an item such as a home, vehicle, or boat that will help cover the remaining unpaid balance if the borrower cannot recover from the default.

What Is a Virginia Promissory Note?

A Virginia promissory note is a contract between a lender and a borrower. It documents the existence of a loan between the parties and the borrower’s promise to repay the loan.

Virginia promissory notes may be secured or unsecured.

• When a promissory note is secured, the lender has the legal right to a specified piece of collateral to help them recoup all or some of the balance owed. A vehicle loan is an example of a secured promissory note.
• An unsecured promissory note is a loan given without collateral. By signing the note, the borrower agrees to repay it.

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When writing a Virginia promissory note, it’s important to title it correctly. If the intent is to write a secured Virginia promissory note, the word “secured” should be used in the title. For instance, Secured Virginia Promissory Note. Without a proper title, a court may determine that the agreement is unsecured if there is a legal dispute over the document.

After the title, use information about the parties and the loan to create the body of the promissory note:

• The date the Virginia promissory note was created. This date is found under the title. It is most often written as month, day, and year. This date, and the date the document is signed, is important because it helps show when the borrower entered into the agreement to repay the loan. It also helps establish certain legal deadlines.
• Each party’s legal name and its role in the contract. The parties to the agreement are, primarily, the lender and the borrower. A co-signer may also be a party to the contract. If there is a co-signer, they should be listed and have their role stated. Identify each party by their legal name and their role. For example, Cat-Dog Auto Finance, Inc., Lender.
• Each party’s full mailing address. A full mailing address, including the city/town, state, and zip code. If the promissory note is secured, it should include the borrower’s physical address if it is different than the mailing address. If there is a co-signer and the note is secured, the co-signer’s physical address should also be documented if it is different from the mailing address. The lender’s main mailing should also be listed here.
• The principal loan amount. This is the amount of money provided by the lender. It does not include the interest charged for the loan. Before this document is signed, this amount should be checked for accuracy.
• The yearly interest rate. This is the amount charged by the lender for the loan. It is expressed as a yearly figure. The most common words used are per annum or annual percentage rate. In Virginia, the highest interest rate that may be charged legally is 12%.
• Payment agreement. This section documents the total number of payments that must be made by the borrower, the amount of each payment, and the due date for each payment. If the lender charges a late fee, the fee amount should be documented along with when the fee is charged. The lender’s payment processing address should be listed if the lender accepts payments via mail.

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If the Virginia promissory note is secured, the note should include a description of the collateral the lender is entitled to if the borrower defaults on the agreement. Without this description, the lender’s right to the collateral may not be supported by the court.

A Virginia promissory note is a financial contract whereby one individual (the “lender”) gives a sum of money to another party (the “borrower”) with conditions for its repayment. The completed document will include the start date of the agreement, the contact information of both parties, the amount of money lent, the interest rate on the loan, payment due dates, late fees, and any personal property that the borrower may offer as collateral. A co-signer may also be required to guarantee that the lender will be paid in the event that the borrower fails to do so on time.