Illinois Promissory Note Form

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Illinois Promissory Note: What Is It?

An Illinois promissory note is a written promise to repay a loan. The parties include the lender, the borrower, and sometimes a co-signer. The promissory note may be secured or unsecured. The most common form of a secured promissory note is a car loan or a mortgage. The purpose of the document is to outline the terms and conditions of the agreement. Illinois promissory notes are governed by 810 ILCS 5 – Uniform Commercial Code. They are also governed by the State’s usury law.

What Is the Maximum Amount of Interest That May Be Charged?

The maximum amount of interest that may be charged in Illinois is set by usury law. That amount is 9%. Any lender who charges more than the maximum legal interest rate could face legal charges.

How to Write an Illinois Promissory Note

Writing an Illinois promissory note can be quite simple with the use of a template. The first thing to consider is whether the promissory note is secured. If it is, the title should reflect that fact. Otherwise, it can be next to impossible to enforce even through legal remedies. Once the title is established, an Illinois promissory note must address:

  • Creation date. This is the date that the Illinois promissory note is created. The date goes beneath the title of the note. It is listed month, day, and year.
  • The legal names and mailing addresses of the parties. The parties include the borrower and the lender. Some promissory notes may include a co-signer. Those that do should include the co-signer’s legal name. Mailing addresses are imperative for notices. If the note is secured, the physical address of the borrower should also be listed. If the payment address is different from the lender’s mailing address, the payment address should also be listed. However, it may be good to list the payment address with the other payment information.
  • The principal loan amount provided to the borrower. This is the amount of money loaned to the borrower. This section doesn’t include the interest amount because interest is discussed on its own. Before an Illinois promissory note is executed, it is important to make sure that the amount listed here is accurate.
  • Interest on the loan. This is the amount of interest that the lender charges the borrower. It is commonly expressed as APR (annual percentage rate) or “per annum” (per year). The lender may not charge more than 9% interest by state law.
  • Payment information. Illinois promissory notes are most commonly fulfilled through installments. Installments are payments made on a certain timeline. It could be weekly, bi-weekly, or monthly. The promissory note should mention how many installment payments are required to pay off the balance and how much those payments are. If a late fee will be assessed when a payment is late, the amount of the late fee and when it will be charged. This is also the section where you’d list the payment address.

If the Illinois promissory note is secured, it is important to include identifying information about the collateral involved. Failure to do so could force the court to treat the promissory note as if it is unsecured.

The promissory note should include some basic clauses to explain the terms and conditions:

  • Interest Due in the Event of Default. This clause lists the amount of interest that the borrow must pay if they default on the loan.
  • Payment Allocation. This clause explains how the money paid is split between the principal balance and interest.
  • Prepayment. There are loan agreements where borrowers want to pay off a loan early. A prepayment clause explains whether the borrower will face a penalty by paying off the loan early.
  • Acceleration. An acceleration clause gives the lender the right to demand immediate repayment if the borrower defaults on the agreement.
  • Attorney Fees and Costs. This clause explains who will pay attorney fees and costs if a legal dispute arises. The parties may be responsible for their own fees and costs. The clause may also state that if the lender sues the borrower and the borrower is found in default, the borrower is responsible for paying the fees and costs incurred by the lender.
  • Waiver of Presentments. This clause explains to the borrower that the lender does not have to be physically present for payments to be made as scheduled.
  • Severability. This clause states that if any portion of the Illinois promissory note is unenforceable that the entire note isn’t thrown out. Only the unenforceable provision shall not be followed.
  • Conflicting Terms. This clause explains that if conflicting terms exist, an amendment will be drafted to clarify the terms and it will govern the note.
  • Notice. A notice clause informs the borrower as to whether they’ll be informed if the lender sues because of a default.
  • Governing Law. This important clause documents the state that will govern the agreement. If the parties are in different states, this clause is helpful because it determines where any legal dispute may be heard.

An Illinois promissory note must be signed by both the borrower and the lender. If there is a co-signer, they should also sign the note. The signatures should be dated. There is no legal requirement to have note notarized or witnessed.


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