A New Mexico secured promissory note allows borrowers to pledge their assets as collateral to secure a loan from another party. The note describes essential details regarding the loan, including the repayment schedule, interest owed, and what will happen if the borrower fails to make payments.
Debtors who have put up something of value to obtain financing will usually be incentivized to pay back the lender in a timely manner. In most cases, the fact that the individual pledged their real or personal property will be sufficient in assuring the lender that they will be compensated, and as a result, cause them to charge a lower interest rate. Should the borrower default on their loan, the lender will be able to recover their losses when ownership of the assets is transferred to their name.
Unsecured Promissory Note – A lending agreement between two (2) parties that is not protected by collateral.