• Signing a promissory note is a commitment to make repayment.pencil on notes image by Kovac from Fotolia.com
  
  A promissory note is a written note from one party to another to commit to a payment of a debt or a loan. This contract entails the terms and conditions under which the payment will be made, such as the interest rate, the names of both parties, the principal amount and maturity date. You should be aware of the different forms of promissory notes.
  
  

Lump Sum Note

• A lump sum note simply means that the repayment of a debt must be paid in full at one time. This means that there would be no interest added to the amount that is owed. The borrower is not required to make periodic payments, and the principal is payable in full on the agreed date of payment.
  
  

Installment Note

• An installment note, also known as amortization note, requires that the borrower pays the principal and the interest at a specific time. The payments will reduce the balance of the loan to zero, on the repayment agreement date. A mortgage is a form of an installment promissory note.
  
  

Demand Promissory Note

• A demand promissory note does not have a specific time for repayment. It is the lender's decision as to when the payment should be made. Most times the borrower will be given a few days notice by the lender, prior to the due date.