This post covers a promissory letter for payment.
How do you legally promise your family or friend that you will pay back his money on a certain date?
Simple! it is through a promissory letter for payment.
Now how do you write an effective binding promissory letter for payment? what should you include in your letter?
That and all questions about promissory letters will be answered in this post.
Here I will take you through
- What is a promissory letter for payment
- Why do you need a promissory letter for payment
- How to write an effective promissory letter for payment
- promissory letter for payment sample
- promissory note for rent payment
- promissory letter for payment in school
- promissory note for payment sample
let’s get started
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What is a promissory letter for payment
A promissory letter for payment is a brief statement of facts written by a person to promise and commit himself to pay another person the money or loan in a specific timeframe.
Don’t get confused here!
The word promissory comes from the word promise. Therefore a promissory letter for payment simply means a letter that promises a payment.
For example, when you lend your friend $1,000 for his personal use, you may wish him to commit himself to the payment of that money through a promissory letter for payment.
Further through a promissory letter for payment, a student may promise to pay his tuition fees, a tenant may promise to pay his due rent, etc.
A promissory letter for payment is commonly used in non-commercial loans or transactions for example, when you borrow money from your relative or family.
Also, a Promissory letter for payment is commonly used for loans from non-traditional lenders, such as individuals or businesses, as opposed to banks or credit unions.
A promissory letter for payment is alternatively referred to as a promissory note
If you prefer something that is more comprehensive than a promissory letter you may use a loan agreement, or mortgage deed.
Also, a debt acknowledgment letter works as great as a promissory letter.
Why do you need a promissory letter for payment?
A promissory letter for payment serves as proof of the existence of a loan or payment.
It can also be used to formally legalize a loan of money or other assets and offers a reliable point of reference that can be used in the future.
For prompt debt repayment, a promissory letter is required.
A promissory letter for payment works well as proof of the original intent if either party is uncertain or threatens not to repay the loan.
It can be a very useful tool for avoiding the high costs of litigation because it allows the creditor to easily prove the existence and amount of the debt.
The promissory note also conveys your gratitude to the creditor for his time and assistance.
In the business world, a promissory letter specifies the date the debt was advanced and the date it will be paid. This practice aids in the development of positive business relationships.
How to write a promissory letter for payment
There are three ways that you can write your promissory letter for payment effectively.
- As a formal letter
- As an agreement
- As a form
Regardless of the format you use, the following must be included in your promissory note to become legally binding;
- Provide your name, address, and contact information
- Include the date of the note
- Provide the name address, and contact information of the other party
- Clearly states the amount to be paid
- If necessary explain the reasons for the debt
- State whether there is an Interest rate
- Explain how the money will be paid (e.g., single payments or regular payments)
- Provide the final date of repayment
- State whether there will be a penalty for late payments
- Include at least two witnesses
- Maintain a professional tone
- Be honest
Promissory letter for payment sample
City, State, Zip Code
[Creditor’s Street Address]
[Creditor’s City, State, and Zip Code]
RE: Promise to pay- [total amount of debt]
Dear [Creditor’s name]
I, [your name] of the aforementioned address, hereby certify that, in order to [reason for a debt], I am in fact and legally indebted to [name of the creditor] in the amount of [total amount of debt in words and figures].
I hereby promise and bind myself to pay the full amount of the loan by [date of final payment].
If payment is not made by the deadline, a [#%] monthly interest fee will be applied.
SIGNED at ………. on this ………… day of …………………. 20…
- [name & signature of the First witness]
- [name & signature of the second witness]
Promissory letter for rent payment
The following is the sample promissory letter for rent payment
City, State, Zip Code
[Landlord’s Street Address]
[Landlord’s City, State, and Zip Code]
RE: Promise to pay my Due Rent- [total amount]
Dear [Landlord’s name]
I’m writing this note to bind myself and promise you that I will pay the full amount of due rent [$#] before [date].
I was unable to pay my rent due to [reason].
I now promise to pay the full due rent on that date because [reasons]
If you have anything to say regarding this letter kindly contact me through the above email or phone number
Thank you for your tolerance and understand regarding this matter.
Promissory letter for payment in school
The following is a promissory letter for payment of tuition fees.
To whom it may concern,
This is a written statement of my inability to make the required tuition payment of [$#] on time. I promise to pay the specified sum on or before [date of payment]
That was due to [reasons]
Additionally, I am fully aware that subsequent Promissory Notes won’t be accepted if my present due amount isn’t paid.
I thus put my hand on this agreement
Promissory note for payment sample
The following is a simple sample of a Promissory note for payment
This promissory note is made this…..day of……
[name of the borroewe] of [mailing address] (borrower)
[name of the lender] of [mailing address] (lender)
WHEREBY IT IS WITNESSED as follows:
- The Lender agrees to lend the Borrower the principal amount [$#] without interest
- The Borrower shall repay the Borrowed Money as a lump sum, in full, in the amount of [$#] by [DATE] (“Due Date”).
- Any payment made by the Borrower is considered late if made more than [#] day(s) after any payment due date (“Payment Due Date”).
- If the Borrower makes a late payment for any Payment Due Date, there shall be a fine of [$#] per day
- This Note shall be unsecured; therefore, no security or collateral shall be provided as part of this note
- There are no agreements, verbal or otherwise that modify or affect the terms of this Note. This Note may not be modified or amended except by a written agreement signed by Borrower and Lender.
- This Note shall be governed under the laws in the State of [STATE].
IN WITNESS WHEREOF the parties hereto have set their hands hereunto and respectively signed these presents the day, month, and year hereinafter appearing.
Lender Signature: ________________ Date: __
Print Name: ________________
Borrower Signature: ________________ Date: __
Print Name: ________________