What is the purpose of a promissory note in a loan agreement?

The purpose of a promissory note in a loan agreement is to serve as a legal document in which the borrower formally agrees to repay the loan under specific terms and conditions. This note includes critical details such as the loan amount, interest rate, repayment schedule, and maturity date. It acts as a promise from the borrower to the lender that the loan will be repaid, creating a legally binding obligation.

In contrast to merely serving as a record of loan payments or outlining the loan origination process, the promissory note is fundamentally about the commitment to repayment. Furthermore, while property eligibility may be relevant to the overall loan agreement, it is not covered by the promissory note itself. Hence, the correct answer accurately captures the primary role of the promissory note in a loan agreement.