The Differences Between Promissory Notes & Checks

You likely won't see a promissory note until you need to borrow an amount of money from a lender. A promissory note and check are both financial instruments. One document promises to repay a particular amount of money; the other orders a bank to pay for an item from the money in your account.

A check is an order to a financial institution to advise the bank you have agreed to pay a certain amount to a person or business in a particular amount from you personal or business account. When the person or business cashes your check, the bank sends your check back to you indicating it was paid. This type of check is considered a canceled check.

When writing a check to pay a person or business, you must completely fill out the check for the bank to accept your check. You must complete the "Pay To The Order Of" space, spell out the dollar amount of the check, write the actual numbers of the amount and sign the check with your signature. A financial institution will not cash the check if this information is missing from the check.

Whether a personal or business account, all checks display the bank's routing number and the complete account number at the bottom of a check. In addition, the check number typically appears in two locations on the check. You can find your check number in the upper right corner and at the bottom of the check after your banking account number.

Typically, people first encounter a promissory note when buying a car or borrowing money for school. A promissory note is a document you sign when you borrow money. Whether borrowing money from a commercial lender, educational lender or automotive lender, a promissory note spells out the terms of borrowing the money, explains the terms of payment and specifies the interest on the loan.

An investor or lender agrees to loan money to a person or company for a particular time. In addition, the person or company agrees or promises to pay the lender or investor the principal or annual interest, which is a fixed return on the loan or investment. Typically, when it's time to repay the loan according to the term of the document, you can send payment via a variety of manners such as a check, money order or debit card.