An Alabama unsecured promissory note is a contract that details the lending of money from one party to the other without the borrower providing collateral as backing. This relatively informal debt instrument records all essential loan terms while avoiding lengthy and complicated details many find unnecessary. Because there is no collateral backing this note, it should be reserved for borrowers that are low risk or those the lender knows personally (such as a family member or friend). It’s important that the lender trusts the borrower’s ability to repay, as the lender has no immediate way of recovering the money lent should the borrower default on the loaned balance.
Secured Promissory Note – With this note, the borrower must put up collateral.