Practical examples of examples of personal promissory notes

Straightforward examples of personal promissory notes for family loans

Most people’s first example of a personal promissory note is a family loan. It feels informal, but putting the promise in writing protects both sides and cuts down on drama later.

Imagine this scenario: A parent lends an adult child $5,000 to cover moving expenses. They want it repaid over two years, with a modest interest rate. A simple example of a personal promissory note for this kind of loan might include:

• Names and addresses of lender and borrower
• Principal amount: $5,000
• Interest rate: fixed annual rate (for example, 4% per year)
• Repayment schedule: monthly payments on the 1st of each month
• Maturity date: the date the final payment is due
• Default terms: what happens if payments are missed

In real life, this often looks like a one- or two-page document, signed and dated, sometimes with a witness or notary. The tone can stay friendly, but the structure should read like a real contract.

Here’s how that might look in plain language:

“Borrower promises to pay Lender the principal sum of Five Thousand Dollars (\(5,000), together with interest at the rate of four percent (4.00%) per year, in 24 equal monthly installments of \)217.39 each, beginning on March 1, 2025, and continuing on the first day of each month thereafter until paid in full.”

This is one of the best examples of how a simple, well-written note avoids confusion about how much, how often, and for how long.

Interest-free examples of personal promissory notes between friends

Sometimes, the lender doesn’t want interest at all. Maybe it’s a small loan between friends, or a short-term bridge loan. In those cases, the examples of personal promissory notes shift a bit.

Picture a friend lending $1,200 to cover a security deposit, to be repaid in six months. The note might say:

“Borrower promises to pay Lender the principal sum of One Thousand Two Hundred Dollars ($1,200). No interest will accrue on this Note if Borrower pays the full principal on or before September 30, 2025.”

The rest of the note still matters: you want dates, payment method, and what happens if the borrower doesn’t pay by the deadline. Even with a zero interest rate, the IRS may care about larger or repeated loans, so for bigger amounts, it’s smart to review the IRS guidance on below-market loans and imputed interest at IRS.gov.

For smaller one-off personal loans, though, this kind of interest-free structure is common. Real examples include:

• A roommate covering another roommate’s share of rent for three months
• A friend paying for a used car repair, to be repaid in four installments
• A short-term loan to cover a medical copay that will be reimbursed later

Even when interest is zero, writing it down makes expectations clear and can actually preserve the relationship.

Secured examples of personal promissory notes using collateral

Not all personal loans are casual. Sometimes you want security. In those cases, the best examples of personal promissory notes include collateral language.

Take a $7,500 personal loan between cousins to buy a used car. The lender wants a safety net if the borrower stops paying. A secured note might say something like:

“This Note is secured by a security interest in the 2019 Honda Civic, VIN [number], owned by Borrower. If Borrower defaults under this Note, Lender may exercise all rights of a secured party under applicable law, including repossession of the vehicle.”

This kind of language turns a simple IOU into a secured transaction. In many U.S. states, the lender would also file a UCC-1 financing statement with the state to perfect the security interest. The Uniform Commercial Code is discussed in detail by the Legal Information Institute at Cornell Law School, which is a solid reference if you want to see how secured transactions work.

Real-world secured examples include:

• A personal loan for a car secured by the vehicle
• A loan for equipment secured by that equipment
• A loan to start a small business secured by business inventory or receivables

These examples of personal promissory notes are more formal, but they significantly reduce risk for the lender.

Student and education-related examples of personal promissory notes

Many people first encounter a formal promissory note when signing for student loans. While federal student loans use standardized forms, private, family-funded education loans often use personal promissory notes.

Consider a grandparent lending $15,000 to a grandchild to cover one year of tuition with repayment starting after graduation. A realistic example of a personal promissory note for this situation might:

• Set a grace period, such as “no payments required until six months after graduation”
• Define what counts as graduation or leaving school
• Provide a fixed repayment term, such as 5 or 10 years
• Include interest rate details, possibly lower than private lenders

Language might look like this:

“Repayment shall begin on the first day of the seventh month following Borrower’s graduation from an accredited four-year college or university, or withdrawal from such institution, whichever occurs first. Borrower shall then make 60 equal monthly payments until the principal and accrued interest are paid in full.”

If you want to compare your education-related note to more formal loan language, the U.S. Department of Education publishes sample promissory note information for federal loans at studentaid.gov, which can help you see how professional lenders structure similar commitments.

Startup and side-business examples of personal promissory notes

A growing trend in 2024–2025 is friends and family financing for small online businesses, side hustles, and gig work. Instead of going to a bank, many founders borrow \(5,000–\)25,000 from people they know and document it with a personal promissory note.

Real examples include:

• A $10,000 loan to launch an e-commerce store
• A $20,000 loan to buy a food truck
• A $25,000 loan to build a mobile app prototype

These examples of personal promissory notes often:

• Tie repayment to fixed dates, not profits (to avoid looking like equity)
• Include a moderate fixed interest rate to compensate the lender
• Spell out whether there’s any prepayment penalty (often there isn’t)
• Sometimes add simple conversion rights (for example, the lender can choose to convert the remaining balance into a small equity stake if the business raises outside funding)

A sample clause for a side-business loan might say:

“Borrower shall make interest-only payments of $150 per month for the first 12 months, followed by 36 equal monthly payments of principal and interest sufficient to amortize the remaining balance at an annual rate of seven percent (7.00%). Borrower may prepay this Note in whole or in part at any time without penalty.”

If the loan is sizable, it’s smart to compare your draft to small-business lending standards. The U.S. Small Business Administration at sba.gov explains how traditional loans are structured, which can help you choose reasonable interest rates and terms.

Event-based examples of personal promissory notes (home sale, inheritance, bonuses)

Some of the most interesting real examples of personal promissory notes are tied to a specific event instead of fixed calendar dates. Instead of “pay me on the first of every month,” the note might say “pay me within 30 days after you sell the house.”

Common event-based examples include:

• A sibling lends $30,000 for a down payment, to be repaid when the house is sold
• A friend covers legal fees, to be repaid after a settlement is received
• A parent advances money to an adult child, to be repaid out of a future bonus

A note like this might read:

“Borrower shall pay the entire outstanding principal and accrued interest in one lump sum within thirty (30) days after the closing of the sale of the property located at 123 Oak Street, Springfield, [State]. If the property is not sold on or before December 31, 2030, Borrower shall begin making monthly payments of $400 starting January 15, 2031, until the Note is paid in full.”

This hybrid structure—event-based with a long-stop date—is one of the best examples of balancing flexibility for the borrower with certainty for the lender.

Key clauses that show up in the best examples of personal promissory notes

If you read through real examples of personal promissory notes, patterns jump out. The language changes, but the building blocks repeat.

Common clauses you’ll see over and over:

1. Interest and usury compliance
Most notes include a line like:

“In no event shall the interest charged or collected under this Note exceed the maximum rate permitted by applicable law.”

States have usury laws that cap interest rates. For background, the Legal Information Institute’s state law pages at law.cornell.edu are a helpful starting point.

2. Late fees and default
Real examples usually define default clearly:

“If any payment is more than fifteen (15) days late, Borrower shall pay a late fee of $25. If Borrower fails to make any payment within thirty (30) days after its due date, the entire unpaid principal and accrued interest shall, at Lender’s option, become immediately due and payable.”

3. Acceleration and attorney’s fees
Many notes allow the lender to “accelerate” the debt on default and recover collection costs:

“If this Note is placed in the hands of an attorney for collection, Borrower agrees to pay reasonable attorney’s fees and costs permitted by law.”

4. Governing law and venue
Since personal loans can cross state lines, real examples of personal promissory notes usually pick a governing law:

“This Note shall be governed by and construed in accordance with the laws of the State of California, without regard to its conflict of law principles.”

These clauses are not just legal filler; they are what turn a casual promise into an enforceable, predictable agreement.

How to adapt these examples of personal promissory notes to your situation

The point of looking at multiple examples of personal promissory notes is not to copy them word-for-word, but to understand the moving pieces so you can adjust them.

When you adapt an example:

• Match the repayment schedule to the borrower’s real cash flow (monthly, quarterly, lump sum)
• Choose a realistic interest rate, keeping state usury limits in mind
• Decide on secured vs. unsecured based on the size and risk of the loan
• Be explicit about dates and triggers (graduation, sale closing, bonus payout)
• Keep the language plain enough that everyone at the table can explain it back in their own words

If the loan amount is large, the borrower is in another country, or the terms are complicated, it’s smart to have a lawyer review your draft. Many state bar associations and law school clinics offer low-cost or pro bono assistance, which you can often locate through your state’s judiciary or bar website (for example, via the U.S. Courts self-help resources).

The best examples of personal promissory notes are not just legally enforceable; they are understandable to the people who sign them.

FAQ: Common questions about examples of personal promissory notes

Q: Can you give a simple example of a personal promissory note for a small loan?
Yes. For a \(500 loan to be repaid in five months with no interest, the note might say: “Borrower promises to pay Lender Five Hundred Dollars (\)500) in five equal monthly installments of $100 each, beginning on May 1, 2025, and continuing on the first day of each month thereafter until paid in full. No interest will be charged if all payments are made on time.”

Q: Do I need a lawyer to draft a personal promissory note?
Not always. Many people use templates and examples of personal promissory notes as a starting point and then adjust the details. For larger loans or cross-border arrangements, a lawyer is strongly recommended.

Q: Are text messages or emails good enough, or do I need a formal note?
Text messages and emails can help prove there was a loan, but they’re often incomplete. A formal note that borrows from tried-and-tested examples of personal promissory notes is usually much clearer about the amount, interest, and due dates.

Q: Do personal promissory notes need to be notarized?
In many U.S. states, a promissory note between private parties does not have to be notarized to be enforceable, but notarization can help prove who signed it and when. Check your state’s rules; your state courts or attorney general’s website often provide basic guidance.

Q: What are some red flags when reviewing an example of a personal promissory note?
Red flags include: extremely high interest rates that might violate state usury laws, vague or missing repayment dates, no clear statement of the total amount owed, or confusing default provisions. Comparing the draft to multiple real-world examples of personal promissory notes can help you spot these problems before anyone signs.