What are the basic terms of a Promissory Note?

• A. Penalties
• B. - Amount of the loan (dollar amount); - Term of the loan (how long); - Purpose of the loan (what is the money being used for); - Interest rate (percentage); - Penalties; - Whether or not the loan is 'secured'
• C. Interest rate only
• D. Repayment schedule only

Answer: (B)

Promissory notes establish the loan's terms by spelling out the essential details that govern repayment and enforcement. The basic terms include the amount borrowed, the term of the loan (how long until it’s due), the purpose of the loan, the interest rate, any penalties or fees for late payment or default, and whether the loan is secured or unsecured. This combination covers what the borrower owes, how long they have to repay, the cost of borrowing, the consequences of not paying on time, and the level of risk to the lender if there is collateral. Focusing on just the interest rate or just the repayment schedule leaves out other critical elements that define the loan and the remedies if it’s not repaid, so the option that lists all these aspects best fits what a Promissory Note typically includes.