Promissory Notes vs Loan Agreements

Promissory Note

A unilateral instrument governed by Section 4 of NI Act 1881. Best for simple loans between known parties.

Loan Agreement

A bilateral contract under Indian Contract Act 1872. Best for complex or high-value transactions.

When to Use What?

• ₹10,000 to a friend → Promissory Note
• ₹5,00,000 business loan → Loan Agreement + PN
• Family loan with EMI → Loan Agreement
• Professional portfolio → Loan Agreement + PN + Indemnity Bond

Lend Astra auto-recommends the right documents based on amount, tenure, and relationship type.