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Q.Why a Promissory Note is essential when lending money to a friend or relative?
A.When a bank, or any financial institution, loans money, the bank will require the borrower to sign a promissory note setting forth the terms of your loan. If you loan money to, or borrow money from, a friend or relative, you should insist on a promissory note, even if you have been assured that such formality is unnecessary. If a disagreement later arises, as they often do when money is involved, both the lender and borrower will have the promissory note to resolve such misunderstandings.
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