Promissory Note


To obtain an in-depth understanding of the structure and distribution paths for promissory notes that are collateralized by hard assets such as luxury watches and precious metals.

Early Findings

  • Promissory notes are legally-binding agreements between a lender and a borrower. The promissory agreement may or may not be collateralized by assets. In instances where the loan is collateralized by assets, it is referred to as a "secured promissory note."
  • Secured promissory notes clearly define the terms of agreement between a lender (the promisee) and a borrower (the promisor). A typical promissory note outlines the date of the agreement, names of both parties, physical addresses of both parties, total sum to be transferred, and the interest rate on loan.

Asides from the basics as outlined above, a standard secured promissory note must clearly describe the following:
  • how the loan is to be repaid,
  • the due date of the loan,
  • interest due in the event of default,
  • allocation of payments and debt servicing,
  • terms of prepayment should the borrower pay back ahead of time,
  • the procedure on late fees,
  • terms of ownership of assets in the event of nonpayment of loan on loan expiry.
  • the procedure on continued failure to repay the loan by the borrower.
  • complete disclosure and ownership of assets to be used as collateral.

The collateral used in securing a promissory note can be either real estate or personal property. Hard assets such as luxury watches and precious metals can be used as collateral if they are completely owned by the borrower.

Several lenders offer loans backed by assets such as luxury watches and precious metals. It is best practice to do an independent valuation of the jewellery to ascertain its value. Although, the lender would most likely reevaluate the property before committing to the loan. Some lenders offer as high as 70% of the auction/trade value of the asset.

Proposed next steps:

You need to be the project owner to select a next step.