A promissory note is a fancy
way of saying "I.O.U.". In fact, I.O.U's are one of the oldest
ways people lent money and property. I.O.U's were commonly done on a handshake,
but now, it is always advisable to have a legal contract written out and
signed by both parties.
The most common inclusions
of a promissory note are the total amount of the loan, interest rate and
payment schedule, dates of payments, and any collateral used for the promissory
note. Sometimes other avenues of compensation are included in the promissory
note.
