At a minimum, a promissory note should identify the lender (payee) and the borrower (maker) by name, state the principal amount being borrowed, and contain a clear, unconditional promise to repay it. It should state the interest rate (or that the note is interest-free) and how interest is calculated, and it must define the repayment terms — a single lump sum due on a maturity date, equal installments on a stated schedule, or payment on demand. Most notes also describe what happens on default (late fees and acceleration of the whole balance), whether prepayment is allowed, and the governing law. The borrower must sign for the note to be enforceable against them; the lender’s signature is recommended but is not always legally required. This generator collects every one of these elements and assembles them into a template, but a valid note must also comply with your jurisdiction’s usury cap and any required lending disclosures, so check your local rules and have a lawyer review it.

A secured promissory note is backed by collateral: the borrower grants the lender a security interest in specific property — for example a vehicle, business equipment, inventory or real estate — and if the borrower defaults the lender can, within the law, take, sell or otherwise enforce its rights against that property and apply the proceeds to the debt. Because the lender has that extra assurance, secured notes often carry lower interest. An unsecured note has no collateral; it relies entirely on the borrower’s personal promise, so on default the lender’s remedy is to sue and collect as an unsecured creditor. This generator lets you toggle between the two: choosing secured adds a security-interest clause where you describe the collateral, while unsecured adds a clause stating the note is not backed by any collateral. Note that a secured note usually needs a separate security agreement, lien, mortgage, deed of trust or financing statement to actually perfect and enforce the security interest against the collateral.

A promissory note can charge interest on the unpaid principal — usually a simple annual rate (per annum) — or it can be interest-free, in which case the borrower repays only the principal. The crucial limit is usury law: every US state, and most countries, sets a maximum lawful interest rate, and the cap can depend on the type of loan and whether the lender is a licensed institution. Exceeding the usury cap has serious consequences — depending on the jurisdiction the lender may forfeit the interest, have to refund excess interest, or have the entire note declared void and unenforceable. To reduce that risk this generator includes a clause that automatically reduces an over-limit rate to the highest lawful rate, but that safeguard is not a substitute for charging a lawful rate in the first place. Any payment estimate the tool shows is a rough convenience figure, not legal or financial advice, so confirm your state or country’s usury limit and any required disclosures before you set a rate.

AnyTool’s Promissory Note Generator runs completely client-side. Every keystroke and toggle updates the Markdown, HTML, plain text and the live preview locally, with no server round-trip, so the lender and borrower details, the principal amount, interest rate, repayment terms, late fee, collateral description and co-signer name never leave your device. Because a promissory note contains personal and financial information, keeping the draft local matters. The page works offline once cached, and closing the tab discards your draft.