Definition of Loan note:
A type of contract whereby the lender and the borrowers obligations are stated in the actual terms of that loan. Should these not be followed, the parties have a right to sue the other.
A loan note is an extended form of a generic I Owe You (IOU) document from one party to another. It enables a payee (borrower) to receive payments from a lender, possibly with an interest rate attached, over a set period of time, and ending on the date at which the entire loan is to be repaid. Loan notes are usually provided in lieu of cash at the payee's request.
A loan note denotes a type of contract that typically outlines the legal obligations of the lender and the borrower. A proper loan note will include a set of contractual penalties, including the right to sue or seek arbitration if either party to the contract fails to meet or otherwise defaults on financial obligations. .
How to use Loan note in a sentence?
- A loan note is a type of promissory agreement that outlines the legal obligations of the lender and the borrower.
- A loan note is a legally binding agreement that includes all the terms of the loan, such as the payment schedule, due date, principal amount, interest rate, and any prepayment penalties.
- Lenders typically require borrowers to agree to loan notes for big-ticket purchases, such as for a home or car.
- In many cases, a loan note is preferable to an informal IOU because a loan note holds more legal significance and is easier to uphold in court should there be a disagreement between the parties.
- Loan notes can have tax benefits to the borrower and can also be a convenient source of seed money for new entrepreneurs and startups.
Meaning of Loan note & Loan note Definition