: installment contract
n. an agreement in which payments of money, delivery of goods or performance of services are to be made in a series of payments, deliveries or performances, usually on specific dates or upon certain happenings. One significance is that failure to pay an installment when due is a breach in which damages can be assessed based on the portion which has not been paid, and is an excuse for the other party not to perform further.
:security interest
n. generic term for the property rights of a lender or creditor whose right to collect a debt is secured by property.
(Note: A security agreement is an agreement giving the lender specific rights of security on a property)
: promissory note
n. a written promise by a person (variously called maker, obligor, payor, promisor) to pay a specific amount of money (called "principal") to another (payee, obligee, promisee), usually to include a specified amount of interest on the unpaid principal amount (what he/she owes). The specified time of payment may be written as: a) whenever there is a demand, b) on a specific date, c) in installments with or without the interest included in each installment, d) installments with a final larger amount (balloon payment). A promissory note may contain other terms such as the right of the promisee to order payment be made to another person, penalties for late payments, a provision for attorney's fees and costs if there is a legal action to collect, the right to collect payment in full if the note is secured by real property and the property is sold ("due on sale" clause), and whether the note is secured by a mortgage or deed of trust or a financing statement (a filed security agreement for personal collateral called UCC-1). The promissory note is usually held by the party to whom the money is owed. There are legal limitations to the amount of interest which may be charged. Charging a rate in excess of the legal limit is called "usury," and this excess is legally uncollectible. When the amount due on the note, including interest and penalties (if any), is paid, the note must be cancelled and surrendered to the person(s) who signed it. A promissory note need only be signed and does not require an acknowledgement before a notary public to be valid.
