An Iowa unsecured promissory note is a document that records a borrower’s legal obligation to repay an unsecured loan to a moneylender. Because the debt is unsecured (i.e., not backed by collateral), the lender risks losing all of the money if the borrower doesn’t pay up. Lenders can lessen their risk by inspecting the borrower’s credit and payment history prior to loan approval. Also, the interest rate for unsecured debt is generally higher when compared to loans documented in a secured promissory note.
Should the borrower cease payment, the lender can employ a debt collector to pursue the delinquent amount. More severe instances may necessitate the filing of a lawsuit.
Secured Promissory Note – Documents the payment terms of a loan that is secured by the borrower’s pledge of collateral to the lender.