Free Vehicle Promissory Note Template

A vehicle promissory note is an agreement to pay for a vehicle purchase. It is a legally binding written promise to pay the vehicle seller the purchase amount of the vehicle in accordance with the terms mentioned in the note. A vehicle promissory note is used when the buyer does not wish to or cannot make an upfront payment for the full purchase price of the vehicle. The seller then loans the purchase price amount to the purchaser using a promissory note template. In a vehicle promissory note, the seller is the “lender” and the purchaser is the “borrower.”

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1. What to Include in a Vehicle Promissory Note
2. Filling out a Vehicle Promissory Note
3. Frequently Asked Questions

What to Include in a Vehicle Promissory Note

A vehicle promissory note should contain the following information:

• Details of the Parties: The note should mention the full name and address of the buyer and seller or the borrower and lender respectively.
• Amount of Loan: The amount of the loan will be the total of the purchase price plus interest. The principal amount can also be higher than the purchase price depending upon the mutual agreement between the parties.
• Interest Rate: The interest rate to be charged should be mentioned in the note. State laws regarding the maximum interest rate that can be charged should be kept in mind while deciding the rate of interest.
• Vehicle Description: A full description of the vehicle including the name, year, make, model, vehicle identification number, and odometer reading should be provided.
• Repayment Structure: How and when the loan is to be repaid should be mentioned, whether in lumpsum or in installments. If it is to be paid in installments, the amount of each installment should be mentioned.
• Location of Sale: The location of the sale should be mentioned. The county and state where the car is located is usually the location of the sale.
• Payment Date and Maturity Date: Dates on which installments are to be paid or the lumpsum payment is to be made should be mentioned.
• Non-payment Clause: Mutually agreed consequences of non-payment should be mentioned. It can include repossession and ownership transfer of the sold vehicle to the seller.
• Signature and Date: Both parties should sign the agreement and the date should also be mentioned.

Filling out a Vehicle Promissory Note

A Vehicle Promissory Note can be filled out by following these simple steps:

Step 1 – Calculate the Principal Amount and Installment Payments

Decide the principal amount and interest rate in consultation with the other party. Determine the total payment and divide it into monthly installments. Enter these details into the form.

Step 2 – Decide the Due Date of Payment Each Month

Decide and enter the date on which installment payment will be made each month by the buyer. Enter the due date of payment of the first installment.

Step 3 – Enter Vehicle Details

Enter all the details related to the vehicle sold including model, year, make, body, vehicle identification number (VIN), odometer reading.

• Make: This is the company name of the car such as Chevrolet, BMW, Ford, etc.
• Model: This is the car name such as Mustang, M5, Impala, etc.
• Year: This is the Car Year of manufacture given by the company at the time of original purchase.
• Body: This can be a sedan, SUV, or convertible, etc.
• VIN: This is a 17-character unique car identifier.

Step 4 – Sign and Execute

Enter the signatures of all the parties involved. If there is more than one buyer, then the signatures of all of them should be put in the form. Also, enter the date and place of signing. Give a signed copy to each party.

Step 5 – Notarize

Notarise the Vehicle Promissory Note in accordance with the state laws.

Frequently Asked Questions

What is a Bill of Sale?

In a transaction of a vehicle sale, a “Bill of Sale” acts as a receipt. It is proof of the vehicle sale transaction between the buyer and seller and includes details like the sale price, vehicle description, and buyer and seller information. If payment for a car purchase is being made through a promissory note, the Bill of Sale should clearly mention the details about such a promissory note. It should include a statement that says that “the payment is being through a promissory note dated (mention the note date) and signed at (place of signing) between (enter the party details).” A completed Bill of Sale should be provided only after all payment is received.

What other laws do I need to keep in mind before selling my vehicle?

Different states have different laws related to the sale of a vehicle. For example, some states require the seller to physically remove the license plate before transferring it to the buyer. Some states require signing a mandatory “release of liability form” to transfer liability from seller to buyer. Therefore, it is important to check all state laws and DMV requirements before selling your vehicle. Download a free vehicle promissory note template or use our convenient step-by-step document builder to create a personalized form.