Promissory Note - Installment - Alabama
INSTALLMENT PROMISSORY NOTE (ALABAMA)
Date: [__/__/____]
Principal amount: $[________________________________]
Maker / Borrower: [________________________________]
Payee / Lender: [________________________________]
1. Drafting Gate
Before execution, counsel should confirm:
- ☐ the transaction is business-purpose or otherwise appropriate for this form;
- ☐ the original principal, interest rate, default rate, late charge, prepayment charge, and every other incident charge have been reviewed together under current Alabama law;
- ☐ the payment dates and amounts are complete and mathematically consistent;
- ☐ the Note is intended to be negotiable and satisfies Ala. Code §§ 7-3-104, -106, -108, and -112; or a conspicuous non-negotiable statement has been added after counsel review;
- ☐ any collateral, guaranty, covenant package, confession, waiver, arbitration term, or jury waiver is documented separately and does not unintentionally alter the Note's status; and
- ☐ the maker's exact name, authority, payee, place of payment, and delivery method are correct.
2. Promise to Pay
For value received, Maker unconditionally promises to pay to the order of Payee the fixed principal amount stated above, together with interest and only the other charges expressly described in this Note.
This Note is payable at the place stated in Section 6. A reference to a separate security agreement or loan agreement is for collateral, prepayment, or acceleration rights only; this Note is not subject to or governed by another writing.
3. Interest and Charges
Regular Interest
- Rate: [____]% per year / [variable formula: ________________________________]
- Interest begins: [__/__/____]
- Day-count method: [________________________________]
- Compounding, if any: [________________________________]
Default Interest
After an uncured payment default, the rate increases by [____] percentage points, beginning [________________________________].
Other Incident Charges
| Charge | Amount or formula | Trigger | Included in lawful-rate review |
|---|---|---|---|
| Late charge | [____________] | [____________] | ☐ |
| Origination / documentation | [____________] | [____________] | ☐ |
| Prepayment | [____________] | [____________] | ☐ |
| Collection expense | [____________] | [____________] | ☐ |
| Other | [____________] | [____________] | ☐ |
If Ala. Code § 8-8-5 applies, every direct and indirect charge incident to the loan is part of the interest analysis. If it does not apply, counsel must determine the governing rate rule, including § 8-8-1 when applicable. This Note contains no automatic reformation or “deemed a mistake” savings clause; the economics must be lawful when signed and charged.
4. Installment Schedule
Maker shall pay the following installments at definite times:
| Payment date | Principal | Interest | Disclosed charge | Total payment |
|---|---|---|---|---|
| [__/__/____] | $[________] | $[________] | $[________] | $[________] |
| [__/__/____] | $[________] | $[________] | $[________] | $[________] |
| [__/__/____] | $[________] | $[________] | $[________] | $[________] |
Additional schedule attached: ☐ yes ☐ no.
All unpaid principal, accrued lawful interest, and enforceable described charges are due on [MATURITY DATE: __/__/____].
5. Prepayment
- ☐ Maker may prepay all or part without premium after [____] days' notice.
- ☐ Maker may prepay subject to this charge, which is described above and included in the lawful-rate review: [________________________________].
Partial prepayments apply as follows: [________________________________].
6. Place and Method of Payment
Payment shall be made to Payee at:
[________________________________]
Approved payment method: [________________________________].
Payee shall give written notice of any replacement payment address or account. A changed payment instruction does not change the amount or due date.
7. Payment Default and Acceleration
A payment default occurs if Maker fails to pay an installment when due and the failure continues for [____] days after [written notice / no notice, if approved: ________________________________].
After an uncured payment default, Payee may declare the unpaid principal, accrued lawful interest, and enforceable described charges immediately due by written notice.
No automatic bankruptcy acceleration, unidentified-account setoff, broad cross-default, or nonpayment covenant default is included in this Note. Add any negotiated event only after counsel reviews unconditional-promise and bankruptcy consequences.
8. Collection Expenses
After an uncured payment default, Maker shall pay Payee's reasonable documented collection expenses, including reasonable attorney's fees, only to the extent permitted by law and included in the interest-and-charge analysis when required.
This Note contains no blanket indemnity, liability cap, force-majeure clause, punitive-damages waiver, automatic equitable remedy, arbitration clause, or jury-trial waiver.
9. Collateral and Guaranties
- ☐ Unsecured. No collateral secures this Note.
- ☐ Secured. Collateral is governed only by this separate security agreement: [________________________________].
Guaranty, if any: [________________________________].
The separate documents do not expand the fixed principal or add a charge unless this Note expressly describes the amount or formula.
10. Governing Law and Forum
Alabama law governs this Note. Selected forum for counsel review: [________________________________].
11. General Terms
- Amendment. An amendment must be in a signed writing identifying this Note and the term changed.
- No implied waiver. A delay or single waiver does not waive another or later default.
- Transfer. Payee may transfer this Note subject to applicable law and any restriction stated here: [________________________________].
- Notices. Notices must be sent to the addresses below by this method: [________________________________].
- Execution method. If counterparts or electronic signatures will be used, counsel should add execution language appropriate to the selected method.
- Severability. An unenforceable provision will be severed only to the extent permitted by law; no court is directed to rewrite the interest rate or another material economic term.
12. Signatures
Maker
[MAKER LEGAL NAME]
By: [________________________________]
Name: [________________________________]
Title: [________________________________]
Address: [________________________________]
Date: [__/__/____]
Payee Acknowledgment of Agreed Terms
[PAYEE LEGAL NAME]
By: [________________________________]
Name: [________________________________]
Title: [________________________________]
Address: [________________________________]
Date: [__/__/____]
Sources and References
About this template
- Last updated
- August 15, 2026
- Citations checked
- August 15, 2026
- Jurisdiction
- Alabama
- Category
- Financial & Banking
Legal authority
- Ala. Code § 7-3-104
- Ala. Code § 7-3-106
- Ala. Code § 7-3-108
- Ala. Code § 7-3-112
- Ala. Code § 8-8-1
- Ala. Code § 8-8-5
- Ala. Code § 8-8-12
Financial and banking documents govern loans, security interests, account agreements, and commercial transactions between lenders, borrowers, and financial institutions. Promissory notes, guaranties, security agreements, and UCC filings have precise legal requirements, and mistakes can leave a lender unsecured or a borrower on the hook for more than they agreed to. Well-drafted finance paperwork protects both sides and keeps the deal enforceable if something goes wrong later.
Not legal advice
This template is provided for informational purposes. We recommend having an attorney review any legal document before signing, especially for high-value or complex matters.
Checked against the law it cites
A reviewer verified this template's legal citations against the official source on August 15, 2026.
Ala. Code § 7-3-104(a) (checked August 15, 2026): "Except as provided in subsections (c) and (d), “negotiable instrument” means an unconditional promise or order to pay a fixed amount of money, with or without interest or other charges described in the promise or order, if it: (1) is payable to bearer or to order at the time it is issued or first comes into possession of a holder; (2) is payable on demand or at a definite time; and (3) does not state any other undertaking or instruction by the person promising or ordering payment to do any act in addition to the payment of money, but the promise or order may contain (i) an undertaking or power to give, maintain, or protect collateral to secure payment, (ii) an authorization or power to the holder to confess judgment or realize on or dispose of collateral, (iii) a waiver of the benefit of any law intended for the advantage or protection of an obligor, (iv) a term that specifies the law that governs the promise or order, or (v) an undertaking to resolve in a specified forum a dispute concerning the promise or order."
Ala. Code § 7-3-106(a), (b) (checked August 15, 2026): "Except as provided in this section, for the purposes of Section 7-3-104(a), a promise or order is unconditional unless it states (i) an express condition to payment, (ii) that the promise or order is subject to or governed by another writing, or (iii) that rights or obligations with respect to the promise or order are stated in another writing. A reference to another writing does not of itself make the promise or order conditional. A promise or order is not made conditional (i) by a reference to another writing for a statement of rights with respect to collateral, prepayment, or acceleration, or (ii) because payment is limited to resort to a particular fund or source."
Ala. Code § 7-3-108(b) (checked August 15, 2026): "A promise or order is “payable at a definite time” if it is payable on elapse of a definite period of time after sight or acceptance or at a fixed date or dates or at a time or times readily ascertainable at the time the promise or order is issued, subject to rights of (i) prepayment, (ii) acceleration, (iii) extension at the option of the holder, or (iv) extension to a further definite time at the option of the maker or acceptor or automatically upon or after a specified act or event."
Ala. Code § 7-3-112(b) (checked August 15, 2026): "Interest may be stated in an instrument as a fixed or variable amount of money or it may be expressed as a fixed or variable rate or rates. The amount or rate of interest may be stated or described in the instrument in any manner and may require reference to information not contained in the instrument."
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