Source: https://eforms.com/promissory-note/
Timestamp: 2018-10-20 03:49:42
Document Index: 480077945

Matched Legal Cases: ['§ 8', '§ 44', '§ 4', '§ 5', '§ 2301', '§ 687', '§ 478', '§ 28', '§ 24', '§ 535', '§ 16', '§ 360', '§432', '§ 12', '§ 49', '§ 334', '§ 75', '§ 45', '§ 336', '§ 56', '§ 14', '§ 24', '§ 1343', '§ 266', '§ 82', '§ 201', '§ 6', '§ 37', '§ 54', '§ 54', '§ 47', '§ 303', '§ 15', '§ 9', '§ 41', '§ 6', '§ 47', '§ 40']

Unsecured Promissory Note – Does not allow the lender to secure an asset for money loaned. This means that if the payment is not made by the borrower that the lender would have to either file in small claims court or through other legal processes.
I Owe You (IOU) – A receipt acknowledging a debt that is owed with no timetable for payment.
Promissory Notes: By Type
Promissory Notes: By State
Since we provide you with the forms, all you really have to do is fill in the blanks. Here’s our quick and simple guide to having your promissory note ready in minutes:
It is always a good idea to run a credit report on any potential borrower as they may have outstanding debt unbeknownst to you. Especially if the debt is IRS or child support related it will take precedence over this promissory note. Therefore, it is imperative that a credit report is run before making any type of agreement.
Reporting Agencies – It is a good idea to use Experian which is free to the lender and charges $14.95 to the borrower. Experian is known as the most sensitive credit agency usually providing the lowest score of the 3 Credit Bureaus (Experian, Equifax, and TransUnion).
If there are red flags that appear on the credit report the lender may want to have the borrower add Security or a Co-Signer to the note. Common types of security include motor vehicles, real estate (provided as a 1st or 2nd mortgage), or any type of valuable asset.
After the main terms of the note have been agreed upon the lender and borrower should come together to authorize the formal agreement. For instructions on how to fill in the document line-by-line refer to the How to Write section.
The borrower should pay back the borrowed money on-time and in accordance with the note. If not, fees may be applied to the overall balance. Once all the money has been fully paid back to the lender a Loan Release Form is created and issued to the borrower relieving them from any liability from the note.
If Borrowed Money is Never Paid – If the borrower defaults on the note then the lender can collect by minimizing their costs by seeking the funds through Small Claims Court (Small Claims is usually limited to a value of $10,000 or less, be sure to check the laws in your jurisdiction). If there was security placed in the note then the property or asset shall be turned over to the borrower in accordance with the note. Otherwise, legal action will most likely be necessary for money owed in value of more than $10,000.
Example – Let’s say I wanted to borrow $1,000 for 3 months at an interest rate of 10%:
First I would want to calculate the interest rate over a year span which would be $100 ($1,000 times 10%). Then I would divide the $100 amount by 4 (as there are 4, 3-month periods in a year) and I would arrive at $25 as the total interest owed I would need to pay over the course of 3 months for borrowing $1,000. The final payment amount would be $1,025.
First I would want to calculate the interest rate over a year span which would be $100 ($1,000 times 10%). Then I would divide the $100 amount by 4 (as there are 4, 3-month periods in a year) and I would arrive at $25 as the total interest owed. Then we would add the Money Borrowed of $1,000 to the $25 of interest due which equals $1,025. Since there are 3 months we would divide $1,025 by 3 and the monthly payment amount would equal $341.67.
Usury Rates & Laws By State
Also known as the maximum rate of interest a lender can charge. It’s important that Lenders do not charge a rate of interest more than what their state allows. The following are links to each state’s Usury Rate Laws.
AL – 8% – § 8-8-1
AK – 10.5% – AS 45.45.010
AZ – 10% – § 44-1201
AR – 5% above the Federal Discount Rate – § 4-57-104
CA – 10% – Article XV
CO – 12% (Consumer), 45% (Non-Consumer) § 5-12-101 thru 5-12-103
CT – 12% Chapter 673
DE – 5% above Federal Reserve Discount Rate § 2301
FL – 18% On Personal Loans Less than $500,00. 25% On Personal Loans Greater Than $500,000 § 687.03
GA – 16$% On Loans under $3,000, 5%/Month On Loans Greater Than $3,000 Title 7, Chapter 4
HI – 10% § 478-4
ID – 12% § 28-22-104
IL – 9% 815 ILCS 205/4
IN – 21% On Loans Less Than $50,000 § 24-4.5-3-201
IA -2% Above Monthly Average, Iowa Superintendent of Banking Updates Monthly Maximum Every Month § 535.2
KS -15% § 16-201
KY -19% or 4% Above Federal Reserve Discount Rate On Loans Less Than $15 (Whichever Is Lesser) § 360.010
LA -12% RS 9:3500
ME – No Limit 9-B §432
MD -8% § 12-102
MA -20% § M.G.L.A. 271 § 49
MI -7% § M.C.L.A. 438.41
MN – 8% § M.S.A. § 334.01
MS – 10% or 5% Above The Federal Reserve Discount Rate (Whichever Is Greater) § Miss. Code § 75-17-1
MO – 10% or 3% Above Long-Term U.S. Government Bond Yields (Whichever Is Greater) § Mo. St. Title XXVI CH. 408.030
MT – 15% or 6% Above The Wall Street Journal Prime Rate (Whichever Is Greater) § MT ST 31-1-107
NE – 16% § NE ST § 45-101.03
NV -No Limit § NV ST 99.050
NH – No Limit § NH ST § 336:1
NJ – 16% § NJ ST 31:1-1
NM – No Limit On Written Agreements § NM ST § 56-8-3
NY – 16% § McKinney’s Banking Law § 14-a
NC – 16% or 6% Above 6 Month U.S. Treasury Bills (Whichever Is Greater) § NC ST § 24-1.1
ND – 5.5% Above 6 Month U.S. Treasury Bills § ND ST 47-14-09
OH – 8% On Loans Less Than $100,000. § OH ST § 1343.01
OK – 10% § OK ST T. 15 § 266
OR – 12% or 5% Above Federal Reserve Discount Rate (Whichever Is Greater) § OR ST § 82.010
PA – 12% On Loans Less Than $50,000. 36% On Loans Over $50,000. § PA ST 41 P.S. § 201
RI – 21% § RI ST § 6-26-2
SC – No Limit § SC ST § 37-3-201
SD -18% § SD ST § 54-3-4 & SD ST § 54-3-16
TN – 24% § TN ST § 47-14-103
TX – 10% § TX FIN § 303.009
UT – No Limit § UT ST § 15-1-1
VT – 12% § 9 V.S.A. § 41a
VA -12% § VA ST § 6.2-303
WA – 12% or 4% Above The 26 Week Treasury Bill (Whichever Is Greater) § WA ST 19.52.020
WV -8% § WV ST § 47-6-5
WI – 8% § WI ST 138.05
WY – 8% § WY ST § 40-14-310
Attorney’s Fees and Costs – The borrower must pay all monies incurred if defaulting on the loan results in the involvement of attorneys and court proceedings. However, if the borrower ends up prevailing in court, no matter the issue, the lender must then pay for all court-related costs.
Waiver of Presentments – This is a short clause that implies that the lender does not have to demand payment when payments or the loan is due, the borrower holds the responsibility to make certain that the payments are paid when due. If the borrower does not pay when due, the lender must issue a notice of non-payment. Further, if the borrower refuses to pay the note, the lender shall have the notice of non-payment presented and notarized which may follow with legal proceedings.
Non-Waiver – If for any reason the lender fails or delays to exercise their rights under the terms of the note, it does not signify or deem that they are waiving their rights. For example The lender delays in responding to the borrower about an upcoming payment due. The non-response by the lender does not give the borrower the right to not make payment on the due date.
Integration – States that no other document can affect the terms or validity of your promissory note. Only can your promissory note be amended (edited) if both the lender and borrower sign a written agreement.
Execution – States that the borrower is the Principal within the note and severally liable for all dues. If there is a co-signer, both the borrower and the co-signer are equally responsible for paying back the loan.
You then have two options to select from – Paying back the loan with a Lump Sum or by Installments. Check the box indicating the agreed frequency of repayment and enter the amount. In our example, we chose Monthly Installments. Since the loan is being charged 16% interest, the borrower will have to make payments every month in the amount of $97 dollars.
When planning to loan money to an individual or business, select “Unsecure“. It’s important to have some level of trust in your borrower if you plan to issue an unsecured note.
Having a Co-signer ensures the loan will be paid back by another person even if the original borrower faults on the loan. You often see co-signers with Unsecured Promissory Notes due to the absence of collateral. In this example, we selected “No-cosigner” since the borrower took out a secured loan by using his iPhone 7 as collateral.
This is fairly an easy step. Simply enter the state that will govern your note (loan). This is particularly important due to the Usury Rates differing by state. The state of the individual or business lending the money (the lender) should be entered. In this example, the lender resides in New York, therefore the state of New York was entered.
The lender, borrower, and a witness should all come together when the time comes to sign the note. If there happens to be a co-signer, notify that person to be present as well. Each person must sign, date and print their name in the presence of the witness.