Montana Promissory Note: What Is It?
A Montana promissory note is a written agreement related to the loaning of money. The parties are the lender and the borrower. Co-signers are often common parties. A Montana promissory note may be secured or unsecured. When it is secured, the borrower promises that the lender can retrieve certain collateral if the borrower doesn’t follow the terms of the agreement. A car loan is the most common type of a secured promissory note. The borrower promises to pay for the car. If they don’t, the lender will take possession of the vehicle.
What Is the Maximum Amount of Interest That May Be Charged?
In Montana, the maximum amount of interest that may be charged is 10% unless the agreement is in writing. Then, it can be up to 15% or 6% over the Federal Reserve primate rate.
How to Write a Montana Promissory Note
When writing a Montana promissory note, it is important to properly name it. A secured note should be named as such. For example, Secured Montana Promissory Note. Without the proper title, the court may hold a secured note as unsecured. Then, certain information is listed to define the relationship and the terms of the agreement:
- The date the promissory note was created. The date the promissory note was created along with dated signatures can help prove the validity of the agreement. It can also be helpful if collections activities must occur because of default. Dates within the note should be written as month, day, and year.
- The identity of each party as well as their role in the agreement. Use the legal name for each party as well as their role within the agreement. For example, Phillip Jones, Co-signer.
- The address for each party. Each party to the contract should have their mailing address listed. For secured Montana promissory notes, include the physical address for both the borrower and any co-signer. If the lender processes payments through an address that is different from the mailing address, the payment address should be included in the loan repayment details.
- The principal amount of the loan. This is the amount provided to the borrower. It does not include the interest added onto the loan. Interest is addressed separately. Before executing the agreement, it is important to verify that this amount is accurately documented.
- The interest charged for the loan. In Montana, this is expressed as either yearly interest, per annum, or annual percentage rate.
- Payment agreement. The payment agreement explains how the loan will be repaid. This includes how many payments must be made, the amount of each payment, the due date for each payment, and whether there is a late fee. The late fee amount should be documented as well as when it will be added to the account.
For secured Montana promissory notes, it is important to provide detailed information about the collateral. Without this information, the court may not allow the lender to retrieve it.
Then, certain clauses are used to create the terms and conditions of the agreement. This is done by inserting clauses. Some of the common clauses found in a Montana promissory note include:
- Interest Due in the Event of Default. This clause states how much interest will be charged if the borrower defaults on the agreement.
- Payment Allocation. An explanation of how received payments are split between the principal amount and the interest.
- Prepayment. This is a term that means the borrower pays of the loan before the end of the payment term. This clause states whether the borrower will receive a financial penalty for prepayment.
- Acceleration. An acceleration clause gives lenders the right to demand immediate and full repayment of the outstanding balance.
- Attorney Fees and Costs. This clause explains how attorney fees and costs are handled if there is a legal disagreement related to the promissory note.
- Waiver of Presentments. This clause states that the lender is not required to be physically present when the borrower makes their payments.
- Severability. If a part of the agreement is found to be invalid, the rest of the agreement remains in effect.
- Conflicting Terms. This clause explains how any conflicting terms found in the Montana promissory note will be clarified.
- Notice. A notice clause states whether or not the lender will notify the borrower if they plan to file a lawsuit related to the promissory note.
- Governing Law. This clause documents the state whose laws will be used if there is a legal dispute.
There is no legal requirement to have a Montana promissory note notarized. However, it must be signed and dated by the borrower and any listed co-signer.
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