How Do You Secure A Promissory Note?
• Understand secured promissory notes. • A secured promissory note is backed by collateral, also called property, that guarantees payment. If the debtor, or person to whom you loaned the money, doesn’t pay, then you can take possession of the collateral. • Know the types of property that can be used as collateral. • Intangible personal property a person can use as collateral includes assets like stocks, rights to a business, copyrights, patents and trademarks. • Real estate can also be used as collateral. • Tangible personal property a person owns can be used as collateral to secure a promissory note. Tangible personal property usually includes items like jewelry, cars, computers, stereos, DVDs, televisions or computer software. • Discuss terms of the agreement with the debtor. This must be done before handing over any money. • Negotiate with the debtor how much he or she can borrow and what type of collateral you’ll accept. • Write up the terms of the agreement. • The agreement should
