Promissory Notes

Promissory Note - Lump Sum Payment With Interest

The Promissory Note - Lump Sum Payment With Interest is used when the borrower can’t afford to make monthly payments to repay the principal for a period of time.

There are two options to pay the interest with this note: one that allows the borrower to repay the principal and all the interest accrued at the end of the term, and the other that requires the borrower to make monthly payments for the interest only during the term and to make one single payment of the principal at the end of the term.

1. Installment payment of interest only during the term and one lump-sum payment of the principal at the end:
The borrower makes interest-only payments every month during the term. At the end of the term, he or she repays the principal in one lump sum payment. The interest rate and the payment schedule of interest must be established in the promissory note.

2. Single lump sum payment that includes the amount of the principal and the interest accrued at the end of the term:
The borrower repays the principal together with the interest in one lump sump payment at the end of the loan term. During the term, no installment payments are made to the lender.