Real‑world examples of secured promissory notes you can actually use

Best examples of secured promissory notes in everyday life

When people ask for examples of secured promissory notes, they’re usually not looking for theory—they want to know how real people structure real deals. Below are some of the best examples you’ll see over and over again in the wild, from used‑car loans between family members to six‑figure business equipment financing.

Instead of numbered lists, think of these as different “profiles” of how a secured note can work.

Auto sale between friends: car used as collateral

One of the most common examples of secured promissory notes is a private car sale where the seller finances the purchase.

Scenario: Alex sells a used car to Jordan for \(12,000. Jordan can pay \)3,000 upfront and needs to finance the remaining $9,000.

Key terms usually included:

• Principal: $9,000
• Interest: fixed 8% per year
• Payment schedule: 36 equal monthly payments
• Collateral: the specific vehicle (VIN, make, model, year listed in the note)
• Security interest: seller retains a security interest in the car until paid in full
• Default: missed payment after a 10‑day grace period
• Remedies: right to repossess the vehicle and apply sale proceeds to the balance

The note is often paired with a simple security agreement and, in many U.S. states, the seller is listed as a lienholder on the vehicle title. This is a textbook example of how a secured promissory note turns a casual loan into an enforceable arrangement.

Small business equipment loan: secured by machinery

If you’re looking for examples of examples of secured promissory notes in the business world, equipment financing is near the top of the list.

Scenario: A small landscaping company borrows $75,000 from a private lender to buy mowers, trailers, and a truck.

Typical structure:

• Principal: $75,000
• Interest: variable, tied to the Wall Street Journal prime rate plus a margin (for example, prime + 4%)
• Term: 5 years with monthly payments
• Collateral: specifically described equipment (serial numbers) and sometimes “all equipment now owned or hereafter acquired”
• Security: a security agreement plus a UCC‑1 financing statement filed with the state
• Default provisions: late payment fees, acceleration clause (entire balance due on default)

This is a good example of how a secured promissory note interacts with Article 9 of the Uniform Commercial Code (UCC) in the United States. The note sets the promise to pay; the security agreement and UCC filing perfect the security interest.

For reference, you can review the UCC Article 9 overview on Cornell Law School’s Legal Information Institute: https://www.law.cornell.edu/ucc/9

Home improvement loan: secured by a second mortgage

Another one of the best examples of secured promissory notes is a home improvement loan secured by a second lien on a residence.

Scenario: A homeowner borrows $40,000 from a private investor to remodel a kitchen and bathroom. The bank already holds the first mortgage.

Common terms:

• Principal: $40,000
• Interest: 10% fixed, interest‑only for 2 years, then balloon payment
• Collateral: a deed of trust or mortgage on the borrower’s home, recorded as a second lien
• Loan‑to‑value limits: note may state the combined loan‑to‑value (CLTV) cannot exceed a certain percentage
• Default: missed payments, failure to keep property insured, or unpaid property taxes
• Remedies: right to foreclose under state law

This example of a secured promissory note shows how real estate collateral dramatically changes the risk profile. Because foreclosure is on the table, the note usually includes detailed notice requirements and cure periods that track state law.

For a high‑level explanation of home equity and second mortgages from a consumer‑protection angle, see the Consumer Financial Protection Bureau (CFPB): https://www.consumerfinance.gov/

Family loan for a startup: secured by business assets and IP

Family loans can go sideways fast if they’re not documented. A thoughtful, secured note can protect both the relationship and the money.

Scenario: A parent lends $100,000 to an adult child to start a software company.

How this often looks in practice:

• Principal: $100,000
• Interest: 5–7% fixed, often set near but below commercial rates
• Term: 7–10 years, with a 12‑month interest‑only period
• Collateral: all business assets, including code, trademarks, client contracts, and equipment
• Security: a security agreement plus a UCC‑1 filing naming the parent as secured party
• Subordination: sometimes subordinated to bank financing if the startup later takes out a commercial loan

This is a modern example of a secured promissory note where the collateral is mostly intangible. In 2024–2025, more small businesses are built on intellectual property and subscriptions than on physical inventory, so the security language has to be drafted carefully.

Real estate investor loan: secured by an investment property

Real estate investors regularly use secured promissory notes in “fix‑and‑flip” or rental property deals.

Scenario: An investor borrows $250,000 from a private lender to buy and renovate a duplex.

Common deal points:

• Principal: $250,000
• Interest: 11–14%, often interest‑only
• Points: 2–4 points paid upfront
• Term: 12–18 months, balloon payment at maturity
• Collateral: a first mortgage or deed of trust on the investment property
• Protective covenants: rehab budget, construction milestones, and inspection rights

This example of a secured promissory note shows how short‑term, higher‑risk loans are priced and documented differently from long‑term home mortgages. The note is almost always tied to a recorded mortgage document in the county land records.

For a neutral overview of mortgage concepts and foreclosure processes, the U.S. Department of Housing and Urban Development (HUD) is a solid starting point: https://www.hud.gov/

High‑value personal loan: secured by investment account

In 2024–2025, more private lenders and high‑net‑worth borrowers are using investment accounts as collateral.

Scenario: A borrower needs $500,000 quickly to buy into a business partnership and offers a brokerage account as security.

Typical terms:

• Principal: $500,000
• Interest: negotiable, often lower because the collateral is liquid
• Collateral: a pledged investment account, documented with a separate pledge agreement
• Control agreement: the lender may require a control agreement with the brokerage firm
• Margin and value triggers: if the account value drops below a threshold, the borrower must add collateral or pay down the loan

This is a sophisticated example of a secured promissory note where third parties (the brokerage) are involved. It’s also a good reminder that a note often references multiple related documents: pledge agreements, control agreements, and notices to the financial institution.

Medical debt consolidation: secured by a vehicle or equipment

Rising healthcare costs in the U.S. have pushed more people to consolidate medical bills through private loans, sometimes secured by personal property.

Scenario: A self‑employed contractor with high medical bills borrows $30,000 from a relative, securing the loan with a work truck and tools.

Key elements:

• Principal: $30,000
• Interest: 6–9%, depending on risk
• Collateral: specifically listed vehicle and major tools
• Use of funds: to pay off itemized medical bills
• Default: missed payments or sale of collateral without consent

This is one of the more sensitive examples of secured promissory notes, because it blends financial stress with health issues. The structure, however, is very similar to a business equipment loan—just in a personal context.

For data on medical debt trends and how they affect households, the Consumer Financial Protection Bureau provides current research and reports: https://www.consumerfinance.gov/data-research/

How these examples of secured promissory notes are structured

Looking across all these examples of secured promissory notes, certain building blocks repeat. Understanding the pattern makes it easier to customize your own document.

Core components you’ll see in almost every example of secured promissory note

Across the best examples, several elements tend to show up:

• Clear identification of parties – Full legal names and contact information for lender and borrower.
• Principal and interest – The exact amount loaned and how interest accrues (simple vs. compound, fixed vs. variable).
• Payment schedule – Monthly, quarterly, interest‑only, or balloon; due dates and grace periods.
• Collateral description – Enough detail that someone outside the deal could identify the property (VINs, serial numbers, legal property descriptions, account numbers, etc.).
• Security interest language – Explicit statement that the borrower grants a security interest in the collateral to secure the note.
• Default and remedies – What counts as default and what the lender can do: accelerate the debt, repossess collateral, foreclose, or pursue a judgment.
• Governing law and venue – The state law that applies and where disputes will be handled.

If an “example of secured promissory note” you’re copying from online is missing any of these, treat that as a red flag.

How secured notes interact with other documents

Another pattern that emerges when you look at real examples of examples of secured promissory notes is that the note rarely stands alone. In practice, it often sits on top of a small stack of related documents:

• Security agreement – Spells out the collateral in more detail and grants the security interest.
• UCC‑1 financing statement – Filed with a state agency to perfect a security interest in personal property.
• Mortgage or deed of trust – Used when real estate is the collateral.
• Pledge or control agreement – Used for investment accounts or other financial assets.

Government and academic sites like the Legal Information Institute at Cornell Law School (https://www.law.cornell.edu/) are useful for checking the legal meaning of terms you see in these examples.

Trends shaping secured promissory notes in 2024–2025

The basic mechanics of a secured note haven’t changed much in decades, but the context around them has.

Higher interest rates and tighter underwriting

With interest rates elevated compared to the late 2010s, more private lenders are:

• Charging higher fixed rates in their secured notes.
• Demanding stronger collateral and lower loan‑to‑value ratios.
• Shortening terms and using balloon payments.

You can see the broader rate environment by watching the Federal Reserve’s updates and data releases: https://www.federalreserve.gov/

These conditions show up in real examples of secured promissory notes as higher rates, more aggressive default clauses, and stricter covenants.

Growth of online templates and DIY legal tools

In 2024–2025, borrowers and lenders are pulling more templates from online legal platforms. That’s convenient, but it also means:

• Many “examples of secured promissory notes” you find are generic and not tailored to your state.
• Critical pieces like UCC filings or recording a mortgage get skipped because the template doesn’t explain them.

The safer move is to treat any template as a starting point, then have a local attorney check it—especially if the collateral is a home, business, or high‑value asset.

Practical tips when using these examples of secured promissory notes

Seeing real‑world examples is helpful, but copying them blindly is not. A few practical points:

• Match the collateral to the risk. A \(5,000 family loan might be fine secured by a car. A \)300,000 business loan probably needs broader collateral and formal filings.
• Check state law. Foreclosure timelines, repossession rules, and interest‑rate limits vary by state. An example from California may not work in Texas or New York.
• Document the collateral properly. If it’s a car, handle the title and lien. If it’s equipment, consider a UCC filing. If it’s real estate, record the mortgage or deed of trust.
• Spell out default clearly. Every good example of secured promissory note you’ll see defines default tightly and explains what happens next.
• Keep communication in writing. Amendments, waivers, and payment‑plan changes should be written and signed, not just agreed to over the phone.

These are the kinds of details that separate “good enough for now” examples of secured promissory notes from documents that actually hold up when something goes wrong.

FAQs about secured promissory notes and real‑world examples

What are some common examples of secured promissory notes I might encounter?

Common examples include private auto loans secured by the car, small business loans secured by equipment, home improvement loans secured by a second mortgage, family startup loans secured by business assets, and real estate investor loans secured by rental or flip properties.

Can I use an online example of a secured promissory note without a lawyer?

You can start with an online example, but you should treat it as a draft, not a finished product. Laws on interest rates, collateral, and foreclosure vary by state. Having a lawyer review the note and any related security documents is usually inexpensive compared to the cost of a dispute later.

Do all secured promissory note examples require a UCC filing?

No. UCC filings are typically used for personal property like equipment, inventory, accounts receivable, or general business assets. If the collateral is real estate, you usually record a mortgage or deed of trust instead. Some smaller, informal loans secured by a single car or piece of equipment may skip a UCC filing, but that can weaken the lender’s position.

What is an example of collateral that is hard to use in a secured promissory note?

Highly personal items with low resale value—like clothing, basic household goods, or sentimental items—are usually poor collateral. Even though they technically can be pledged, they’re hard to value and hard to sell, so you rarely see them in serious examples of secured promissory notes.

Can a secured promissory note be converted to an unsecured note later?

Yes, if both parties agree in writing. For example, if the borrower consistently pays on time for several years, the lender might agree to release the collateral and sign a modification turning the deal into an unsecured note. That release should be documented formally, and any UCC filings or recorded mortgages should be terminated or released in the public record.

Used correctly, these real‑world examples of secured promissory notes can give you a solid blueprint. Just remember: the more money and risk involved, the more important it is to get local legal advice before anyone signs.