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Ventura Real Estate Lawyers

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Real Estate Law & Litigation

Loans & Notes

Difference Between a Note & a Loan Agreement. A note and a loan agreement both commit the borrower to pay back a sum of money by a certain date at a specific interest rate. The big difference is size: A loan agreement is longer and covers much more ground.


A promissory note is a written promise to pay someone money. If someone gives a person a loan, signing a promissory note creates a legal obligation to pay it back. 


A loan agreement serves the same purpose as a promissory note. It covers the terms for repaying the loan and identifies the debtor and creditor. However, it goes into much more detail about the legal rights and obligations of both parties. 


Loan agreements and promissory notes both have to conform to state and federal law to be legal. Both documents are a type of contract, so they must follow contract law. A promissory note can be written to be a negotiable instrument, meaning the lender can transfer the note, and the right to receive payments, to someone else. If the note is negotiable, it must conform to the laws covering negotiable instruments as well as contracts.