Definition of 'Loan Note'
Loan notes can be used for a variety of purposes, such as financing a business purchase, home improvement, or education. They can be issued by banks, credit unions, and other financial institutions.
When a borrower takes out a loan, they sign a loan note that outlines the terms of the agreement. The lender then holds the note as collateral for the loan. If the borrower fails to make payments on the loan, the lender can foreclose on the collateral and sell it to recoup their losses.
Loan notes can be either secured or unsecured. A secured loan is backed by collateral, such as a house or car. If the borrower defaults on the loan, the lender can seize the collateral and sell it to repay the debt. An unsecured loan is not backed by collateral, so the lender has no recourse if the borrower defaults.
Loan notes can also be either promissory notes or demand notes. A promissory note is a promise to repay the loan on a specific date. A demand note can be called in for payment at any time by the lender.
Loan notes are an important part of the lending process. They provide lenders with a way to document the terms of a loan and protect themselves in the event of a default.
Do you have a trading or investing definition for our dictionary? Click the Create Definition link to add your own definition. You will earn 150 bonus reputation points for each definition that is accepted.
Is this definition wrong? Let us know by posting to the forum and we will correct it.