An Arizona unsecured promissory note is used to outline the terms and conditions of a collateral-free loan. This type of agreement allows a lender to record all the necessary provisions involved in moneylending (e.g., interest charges, non-payment fees, schedules, and deadlines). As borrowing money can be a delicate matter, a promissory note is key in ensuring an agreeable repayment process for the parties involved.
While the lack of collateral may seem disadvantageous for the lender, it is important to bear in mind that once the borrower enters into the agreement, they are legally obliged to return the loan plus interest/fees by the agreed-upon deadline. Any default on their behalf will allow the lender to contract a debt collection agency or, as a last resort, resolve the matter in court.
Secured Promissory Note – Allows two (2) parties to agree on a loan’s details, including interest rate, payment schedule, and collateral requirements.