A Vermont unsecured promissory note is a legally binding commitment where a borrower agrees to repay a lender a specified amount within an agreed-upon period without the provision of collateral. This arrangement exposes the lender to the risk of not recovering their money if the borrower defaults, so it’s important the lender trusts the borrower before issuing the loan.
Lenders should favor people they know personally or individuals with strong credit histories, as they can use these factors as indicators of their ability to meet payment obligations. These notes are best for smaller loan amounts and in less formal lending situations, but the lender can still pursue legal recourse in court if the borrower defaults.
