A Tennessee secured promissory note formalizes a loan agreement between a borrower and a lender, explaining the amount borrowed and the repayment terms under the protection of collateral. By signing this document, both parties acknowledge the legal obligations and protections it affords, making it enforceable in a court of law if a dispute arises.
The borrower designates one of their assets as collateral at the loan’s inception to secure the lender’s investment. If they default on the loan, the asset goes to the lender so they can use it as compensation for the outstanding debt, ensuring the mitigation of the lender’s financial risk.
