An Iowa secured promissory note is a legal document that defines the payment terms of a loan that is protected, or “secured,” with collateral. A secured lending transaction requires the borrower to designate a personal asset, like their home or vehicle, to serve as backing for the loan. If the borrower is unable to repay the debt, the lender may sell the collateral as a means to recover the unreturned amount. Lenders should ensure that the borrower’s asset is worth at least as much as the loan’s value. This way, they can be confident they’ll be fully compensated if the borrower defaults.
Unsecured Promissory Note – This promissory note should be used when there is no collateral protecting the loan.