A Vermont secured promissory note creates a contract between a lender and a borrower, detailing the mechanics of a loan and the collateral that secures it. This collateral, which can be real or personal property, is something that the borrower pledges to ensure repayment of the loan’s principal and interest if they default.
Both parties reference this document to review the loan’s amount, interest rate, consequences of late payments, a description of the collateral, and scenarios leading to default. It serves as a framework whereby, in instances of non-repayment, the lender has the right to possess and potentially sell the collateral to offset the financial shortfall.
