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 car promissory note:
simple promissory note for car sample
Sandy Jones (borrower)
Dean Martin (lender)
Original Loan Date: May 03, 2019
Entire Repayment Due: May 03, 2021
Principal Amount of Vehicle Loan: $4,500
This Note is to document the sale of Make of Vehicle, VIN number, model, year of manufacture owned by Dean Martin, who has the legal right to sell the car to Sandy Jones.
• The above Borrower promises to pay the above Lender the principal sum of $4,500 with interest at the rate of 7% per annum that is calculated every year and not in advance.
• The Borrower will make monthly payments of $200 on or by the fifth day of each month and this Note will be repaid in full on May 03, 2021 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 $50 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 May 03, 2019.
Sandy Jones, 05/03/2019
Dean Martin, 05/03/2019