Updated on January 31st, 2022
A Kentucky secured promissory note is a written loan repayment plan wherein the individual borrowing money offers the lender collateral to secure the loan. Both secured and unsecured promissory notes relay the principal loan amount, rate of interest, fees for late installments, and the deadline for repayment. However, where a secured note differs is that the borrower must pledge something of value (the collateral) to protect the loan in the event of default.
If the borrower cannot satisfy their repayment obligations, the lender can claim ownership of the pledged collateral. It is this risk that compels individuals to comply with the promissory note and refund the money when required.
Unsecured Promissory Note – An unsecured note is not protected by an offering of collateral from the borrower to the lender.