Updated on January 31st, 2022
A Maine secured promissory note is a binding agreement to pay back an interest-bearing loan that is secured by the borrower’s asset(s). Secured loans are protected by a pledge of collateral from the borrower to the lender. If the borrower can’t repay the debt when required, ownership of the collateral transfers to the lender, who may then sell it to recover the money lost.
While real estate is the most common form of collateral, the note may be secured by other assets, including vehicles, business inventory, stocks, jewelry, and savings accounts. Regardless of the type of collateral, the lender should confirm that its value is equivalent to the loan amount and that it can be liquidated easily if the borrower defaults.
Unsecured Promissory Note – Determines the conditions of a loan that is not secured by collateral.