About the Promissory Note Generator
This promissory note generator turns the key terms of a personal loan into a clear, printable promissory note — a written promise by the borrower to repay a set amount on set terms. Enter the names of the lender and borrower, the amount, the annual interest rate, whether the loan is repaid in monthly installments or one lump sum, and the dates. The tool calculates the payment, the total interest and the final due date, and writes the note text with those figures filled in, followed by a payment-by-payment schedule.
It is designed for informal and family loans, loans between friends, small business owners lending to a partner, or anyone who wants an IOU that spells out exactly what is owed and when. Putting the terms in writing helps prevent misunderstandings, gives the lender evidence of the debt, and helps show the IRS that a family loan is a genuine loan rather than a gift.
Installment notes use standard monthly amortization; lump-sum notes accrue simple interest on an actual/365 basis from the note date to the maturity date. The generated text is a general template, not legal advice: requirements for signatures, witnesses, notarization, usury limits and security interests vary by state and country, so have a lawyer review any note for a large or secured loan.
With the default inputs, the payment amount is $219.36. Change any value above to recalculate instantly.
How to use the promissory note generator
- 1Enter the full legal names of the lender and the borrower.
- 2Enter the loan amount, the annual interest rate and the term in months.
- 3Choose monthly installments or a single lump-sum repayment and set the dates.
- 4Set the late fee, grace period, governing law and any collateral.
- 5Copy the note text, print it with the schedule, and have both parties sign and keep a copy.
Formula and method
For an installment note the monthly payment uses the standard amortization formula, so every payment is the same and each one first covers the interest accrued that month (balance × annual rate ÷ 12), with the rest reducing principal. The final payment date is the first payment date plus n − 1 months, and interest is stated to accrue from one month before the first payment so the level schedule is exact even if the first payment is set later than a month after the note date.
For a lump-sum note, interest is simple interest on the original principal from the note date to the maturity date (the note date plus the term in months), counted in actual days over a 365-day year. The single payment due at maturity is the principal plus that interest. Both methods assume every payment is made on its due date.
- M
- Monthly installment
- P
- Principal (amount lent)
- r
- Monthly interest rate (annual rate ÷ 12)
- n
- Number of monthly payments
- days
- Days from the note date to the maturity date
Worked examples
$5,000 family loan at 5% repaid over 24 months
A $5,000 loan at 5% amortized over 24 months costs $219.36 a month. Starting November 1, 2026, the last payment falls on October 1, 2028, and the borrower pays $264.57 in interest in total.
$10,000 lump-sum note at 6% due in 12 months
Simple interest runs for 365 days from October 1, 2026 to October 1, 2027: $10,000 × 6% × 365 ÷ 365 = $600. The borrower pays $10,600 in one payment on the maturity date.
$12,000 loan to a business partner at 7% over 3 years
Amortizing $12,000 at 7% over 36 months gives payments of $370.53. Beginning January 15, 2027, the 36th payment is due December 15, 2029, with $1,338.91 of interest over the life of the note.
Frequently asked questions
What should a promissory note include?+
At minimum: the names of the lender and borrower, the amount borrowed, the interest rate, the repayment schedule or maturity date, what happens on late payment or default, whether the loan is secured, the governing law, the date and the borrower’s signature.
Does a promissory note need to be notarized?+
In most US states a simple promissory note is enforceable when signed by the borrower without a notary. Notarizing or having a witness sign makes it harder to dispute the signature, and secured notes tied to real estate usually must be notarized to be recorded.
What interest rate should I charge on a family loan?+
To avoid imputed-interest and gift-tax issues, many families charge at least the IRS Applicable Federal Rate (AFR) for the loan’s term, published monthly. Small loans of $10,000 or less are generally exempt from the below-market loan rules if not used to buy income-producing assets.
What is the difference between a promissory note and a loan agreement?+
A promissory note is a one-sided promise to pay signed by the borrower. A loan agreement is a longer contract signed by both parties that can add covenants, representations and remedies. For simple personal loans a promissory note is usually enough.
Can a promissory note have no interest?+
Yes. An interest-free note is valid between private parties, but for larger loans to family members the IRS may treat the forgone interest as a gift or as income to the lender, so check the AFR rules before lending interest-free.
Results are general estimates and not legal advice. Laws vary by jurisdiction — consult a qualified attorney.