What is a promissory note?

A promissory note is fundamentally a written promise to repay borrowed money. It serves as a legal document that outlines the terms of the loan, including the amount borrowed, the interest rate, and the repayment schedule. This document provides assurance to the lender that the borrower is committed to paying back the loan, thus creating a formal obligation. The existence of a promissory note can be crucial in financial transactions, as it establishes clear expectations and can be enforced in a court of law if necessary.

The other options do not accurately describe a promissory note. While one choice mentions a contract for job placement, this pertains to employment agreements rather than financial commitments. Another option refers to financial aid, which typically involves grants or scholarships rather than a borrower's promise to repay funds. Lastly, a summary of a person's financial history relates to credit reports or financial statements, which provide a broader perspective on an individual's financial activities rather than a specific agreement to repay a loan.