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.”
A vehicle promissory note should contain the following information:
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.
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.
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.
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.