In the state of California, both lenders and borrowers use secured promissory notes whenever they need to lend or borrow money. This type of legal agreement provides the lender with additional security that they will get their loan back.

In this article, we will discuss what exactly California secured promissory note is and how it differs from the unsecured promissory note. Additionally, we will discuss the way to write a secured promissory note California.

What Is a California Secured Promissory Note?

California secured promissory note is a contract between two parties, including a lender who lends money to another party (borrower) which can be any individual or business. As the name suggests, this promissory note is secured as it is backed by any collateral.

In secured promissory note California, the borrower pledges his/her any asset or property such a vehicle or home as collateral. It serves as additional insurance and security for a lender when lending money to the borrower, specifically if the borrower fails to repay the loan.

More precisely, a secured promissory note enables the lender to claim for collateral and take into possession a vehicle, land, home, or any other personal property pledged by the borrower. Lenders are highly advised to use secured notes if the borrower has a poor credit loan history.

Differences between California Secured and Unsecured Promissory Note

As mentioned earlier, California promissory notes are of two main kinds, one is a secured promissory note, and the other is an unsecured note. Both promissory notes differ from each other depending on their specific terms for the loan.

In California secured promissory note, the borrower is obliged to repay the loan, and money loaned is secured by some property. Simply put, if the borrower fails to make loan repayment due to any reason, the lender can seize the borrower's designated property or asset to reimburse the loan.

In other words, if the collateral attached to the promissory note is of sufficient value that covers the amount of money loaned, the lender has a guarantee of being repaid.

Likewise, an unsecured promissory note is a legal contract in which lender and borrower enter to outline the specific terms for loan repayment. However, unlike secured promissory note California, an unsecured note does not guarantee the lender to obtain loan repayment.

In an unsecured promissory note, the lender will need to file a civil lawsuit against the borrower if he fails to satisfy loan payment in full within the agreed-upon time. Moreover, an unsecured note California is used by the lender when the borrower has a good credit history.

How Do You Write a California Secured Promissory Note?

When it comes to writing secured promissory note California, all you need to do is to follow some simple steps:

  • Initially download the free downloadable templates for secured promissory note offered by CocoSign.
  • Now in this step, you will need to input some information about the lender and borrower. This section includes the legal names of both borrowers and lenders along with their address and interest rate (per year) if it is applied.
  • Thirdly, you need to add information about the payment method that will be used by the borrower. Precisely, this section requires information about the payment schedule, installment options along with the amount of loan payment. Lenders must also list the due date for payment.
  • Furthermore, you must include the amount of interest that will be charged in case of default on loan.
  • In the next step, you must include information about late fees and the amount that the borrower will need to pay. Besides, the lender must list days for the borrower to cure the default.
  • More importantly, a secured promissory note must include a comprehensive description regarding collateral that is pledged by a borrower as security.
  • Lastly, signatures of both lenders and borrowers are required along with dates to bring California secured promissory notes into effect.


All in all, California secured promissory note is used by the lender and the borrower to guarantee loan repayment. Lenders are advised to use a secured promissory note if they feel like the borrower has a poor credit history and low net worth.

This contract is legally binding between lender and borrower offering additional security to the lender in the form of collateral. If you are planning to give a loan to any individual or business, make sure you use a secure promissory note California.

You can visit our website CocoSign, where we have great templates for California secured promissory notes.


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