Promissory Note Examples with Co-Signer

Understanding Promissory Notes with Co-Signer

A promissory note is a legal document that outlines a promise to pay a specified sum of money to a designated party under agreed-upon terms. When a co-signer is involved, it adds an additional layer of assurance for the lender, as the co-signer agrees to take responsibility for the debt if the primary borrower defaults. Below are three diverse examples of promissory notes with co-signers.

Example 1: Personal Loan Promissory Note

In this scenario, a friend lends money to another friend for purchasing a car. To ensure repayment, a co-signer is included in the agreement. This example illustrates a common use case for personal loans among individuals.

Promissory Note
Date: April 15, 2023
Principal Amount: $10,000
Borrower: Sarah Johnson
Co-Signer: Mark Thompson
Lender: David Lee
Terms of Repayment:

• Interest Rate: 5% per annum
• Payment Schedule: Monthly payments of $200, starting May 15, 2023
• Maturity Date: April 15, 2025

Note: If Sarah defaults on her payments, Mark will be responsible for the outstanding balance.

Example 2: Business Loan Promissory Note

This example involves a small business owner seeking to expand their operations. A co-signer, who is a business partner, agrees to back the loan, providing additional security for the lender.

Promissory Note
Date: March 1, 2023
Principal Amount: $50,000
Borrower: ABC Tech Solutions, LLC
Co-Signer: John Smith
Lender: First National Bank
Terms of Repayment:

• Interest Rate: 7% per annum
• Payment Schedule: Quarterly payments of $5,000, starting June 1, 2023
• Maturity Date: March 1, 2026

Note: Both ABC Tech Solutions and John Smith are jointly liable for repayment. If the business fails to make payments, John’s credit will also be affected.

Example 3: Student Loan Promissory Note

In this case, a student is taking out a loan to finance their education. A parent co-signs the loan to help the student secure better terms and lower interest rates, indicating the parent’s commitment to assist with repayment if necessary.

Promissory Note
Date: August 20, 2023
Principal Amount: $30,000
Borrower: Emily Davis
Co-Signer: Linda Davis (Parent)
Lender: Education Funding Corp.
Terms of Repayment:

• Interest Rate: 4% per annum
• Payment Schedule: Monthly payments of $300, starting February 20, 2024
• Maturity Date: August 20, 2030

Note: If Emily fails to make payments, Linda, as the co-signer, will be responsible for the loan balance, impacting her credit score as well.

Conclusion

These examples provide a clear view of how promissory notes with co-signers function in various contexts. Understanding the structure and terms of these notes is crucial for both borrowers and lenders to ensure compliance with the agreed-upon obligations.