{"id":352559,"date":"2016-04-04T10:42:05","date_gmt":"2016-04-04T15:42:05","guid":{"rendered":"https:\/\/content.findlaw-admin.com\/ability-law\/consumer\/credit-banking-finance\/use-promissory-notes-when-lending-to-family-and-friends.html"},"modified":"2024-01-23T13:24:42","modified_gmt":"2024-01-23T18:24:42","slug":"use-promissory-notes-when-lending-to-family-and-friends","status":"publish","type":"page","link":"https:\/\/www.findlaw.com\/consumer\/credit-banking-finance\/use-promissory-notes-when-lending-to-family-and-friends.html","title":{"rendered":"Use Promissory Notes When Lending to Family and Friends"},"content":{"rendered":"\n
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Use Promissory Notes When Lending to Family and Friends<\/h1>\n
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\n By Olivia Wathne, J.D.<\/a> | Legally reviewed by Melissa Bender, Esq.<\/a>\n | Last reviewed\n
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This article has been written and reviewed for legal accuracy, clarity, and style by FindLaw\u2019s team of legal writers and attorneys<\/a> and in accordance with our editorial standards<\/a>.<\/em><\/p>\n\n <\/div>\n <\/details>\n\n

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The last updated date refers to the last time this article was reviewed by FindLaw or one of our contributing authors<\/a>. We make every effort to keep our articles updated. For information regarding a specific legal issue affecting you, please contact an attorney in your area<\/a>.<\/em><\/p>\n\n <\/div>\n <\/details>\n<\/section>\n

Loaning money to family members and friends is delicate. Always protect yourself by putting the loan amount, the terms of the loan, and the repayment terms in writing. "Promissory notes" are legal documents that contain the terms of a loan so that there is a legally actionable record of the loan specifics.<\/p>\r\n

Whether for help with a down payment, car loan, or credit card, any type of loan has legal, financial, and tax implications. A promissory note is a written record of the loan agreement. It is important to have in case the IRS ever audits you. You’ll need it to take legal action if the borrower defaults. In essence, it’s a legally binding IOU.<\/p>\r\n

The Basic Terms of Promissory Notes<\/h2>\r\n

There are three very basic things that you should put in promissory notes. Keeping it simple can help calm any fears that friends or family may have about signing the note. The three things to include in promissory notes are:<\/p>\r\n