A Vermont secured promissory note is a financial agreement between a lender and a borrower that sets forth the terms of a secured loan and its repayment. The loan is secured by collateral, which is a piece of real or personal property that the borrower offers as compensation for the remaining principal and interest owing if the loan defaults. The note will relay the amount of the loan, interest rate, penalties for late payment, a description of the collateral, and the conditions under which the loan can default.
If the borrower cannot pay back the loan on time, the lender will be able to seize and keep or sell the collateral as compensation for their financial loss.
Unsecured Promissory Note – A promissory note without any collateral provided by the borrower.