A Colorado promissory note is a legally binding document formalizing a promise to repay borrowed money. It outlines essential loan terms, like interest rates and repayment schedules alongside details such as the parties’ names and addresses, the borrowed amount, and, if applicable, collateral securing the loan.
The parties must understand their rights and obligations under state law to prevent disputes. Failure to adhere to the note’s stipulations may prompt the lender to initiate legal action against the borrower for breach of contract.
Laws: Given their contractual nature and that they are classified as security, promissory notes fall under various sections of Colorado’s Revised Civil Procedures.
Statute of Limitations: Six years (§ 4-3-118).
Usury Laws and Interest Rates
Promissory notes must comply with the state’s usury laws detailed in Colorado Revised Statutes Title 5, Articles 1-9 and Article 12.
- With a Contract (§ 5-12-103): Not more than 45% per annum.
- Without a Contract (§ 5-12-101): 8% per annum in the absence of an agreement.
- For Municipal Indebtedness (§ 5-12-104): 6% per annum.
- For Commercial Credit Plans (§ 5-12-107(2)(a)): Not more than 45% per annum.
- For Unsupervised Consumer Loan (§ 5-2-201(1)): Not to exceed 12% per year on the unpaid balance.
- For Supervised Consumer Loan (§ 5-2-201(2)): 21% on the total loan amount or 36% for amounts up to $1,000, 21% on $1,001 to $3,000, 15% above $3,000, whichever is greater.
- For Deferred Deposit/Payday Loan (§ 5-3.1-105): 36%.
- For Judgment for Damages (§ 13-21-101(1)): 9% per annum from the date the action accrued.
