In some states, it is illegal for someone buying a private car to agree to take over an existing auto loan. It is necessary for the loan to be completely repaid and for the seller to be the lender to the new borrower. It is also recommended to sign the document in front of a Notary Public who will sign and seal the document. Copies of the Note should be given to the borrower and lender as well as a third party.
Below is a sample promissory note for car loan.
Sample Promissory Note for Car Loan
Name and Address of Borrower
Name and Address of Lender
Principal Amount of Car Loan
This Note is to document the sale of Make of Car, VIN number, model, year of manufacture owned by the Lender, who has the legal right to sell the car to the Borrower.
• The above Borrower promises to pay the above Lender the principal sum of AMOUNT OF LOAN with interest at the rate of PERCENTAGE OF INTEREST per annum that is calculated every year and not in advance.
• The Borrower will make monthly payments of AMOUNT on or by the fifth day of each month and this Note will be repaid in full on DATE at which time the Lender will transfer the title of the car to the Borrower with a recording of the odometer reading.
• This Note is constructed in accordance with the laws of the State of STATE.
• As long as the Borrower is not in default of payments, Borrower may pay the outstanding balance owed on the Note to the Lender without penalty or further bonus payments.
• If the payment is more than five days late, a penalty of AMOUNT will be added to the principal.
• Any legal costs that the Lender incurred because the Borrower was in default of payments will be added to the principal of the loan, and will be immediately paid by the Borrower.
• If any competent court holds any part of this Note to be invalid or void, both parties involved intend that the provision be reduced in scope only to the extent deemed necessary by the court and that the remainder of the provisions remain unaffected.
• This Note will be binding upon the heirs and successors of both the Borrower and Lender.
The Note is witnessed by the Borrower and Lender with signatures on this day of DATE.
Signature of Borrower
Printed Name of Borrower and DATE
Signature of Lender
Printed Name of Lender and DATE
By Andre Bradley