"IOU," "promissory note," and "loan agreement" all do a similar thing — record that one person owes another — but they differ in how much they spell out. Here’s the short version.
IOU — acknowledges the debt
An IOU is the lightest. It says that a debt exists: who owes whom, and how much. It doesn’t necessarily set out how it’ll be repaid. Great for small, friendly amounts. → Make a free IOU
Promissory note — adds the promise to repay
A promissory note acknowledges the debt and contains a specific promise to repay on set terms (amount, date, sometimes interest). It’s a half-step more formal than an IOU — useful when you want the repayment terms to be unmistakable.
Loan agreement — the full picture
A loan agreement is the most complete: parties, amount, repayment schedule, interest, and what happens if a payment is missed. Use it for larger sums or instalment plans. → Loan agreement template
Which should you use?
- A quick, one-line debt between friends → IOU.
- You want the repayment promise spelled out → promissory note territory; a structured agreement covers it.
- A bigger amount or a payment schedule → loan agreement.
Whichever you pick, the thing that actually matters is the same: both people sign the same version, in plain English you both understood. That’s what turns a memory into a record.