- A secondary market for promissory notes exists because some investors don't want to wait for the time period on the note to be repaid. The note's owner may then re-sell the note at a discount off what the note is worth when it is satisfied. This allows the note seller to get cash immediately and avoid a possible non-payment because a home was foreclosed on or a business declared bankruptcy.
- Promissory notes can be found for a variety of transactions --- real estate notes, businesses notes, commercial notes or mobile home notes, to name a few. Each of these categories will also have subcategories. A home seller may be willing to do owner financing of a sale, which would then require a promissory note instead of a mortgage. A business may expand using capital from a promissory note instead of a bank loan.
- The terms of the note are set by between the primary buyer and seller. Large factors in the note or the determination of how much money the seller needs and how soon he believes it can be paid back. Such factors as good credit, value of property compared to value of note, desirability of the property and length of time for the note all contributed to setting the payback rate.
- While most transactions with a promissory note are legitimate, some scams are out there. The U.S. Security and Exchange Commission has advice to avoid such scams. Most notes are sold privately to knowledgeable buyers and not to the general public, particular if it is being offered through a cold call sale. Check to see if the investment is registered with the SEC. Beware if you are told that the note is not a security. Notes offered should be registered securities if they are legitimate. Check the seller's license or any guarantee offered with the note by calling your state insurance commissioner.