A Georgia promissory note is a formal commitment where an individual pledges to repay borrowed funds to another party, be it an individual or an entity, within a specified timeframe and with interest. It offers flexibility regarding repayment, allowing parties to choose between full payment on a fixed due date or installment payments spread over time.
These documents can be secured or unsecured, necessitating the borrower to provide collateral to the lender. In case of breach of contract, the lender may accept the collateral as full settlement or pursue legal action against the borrower if no collateral was provided. Key elements in these documents include details about the parties involved, loan date, amount, interest rate, and payment plan.
Laws: Promissory notes are governed by state laws concerning contracts, collections, and the interest rates applicable to loans. Some of these are established in Article 3 of the Commercial Code, which addresses negotiable instruments and establishes rules governing their creation, transfer, and enforcement.
Statute of Limitations: Six years (§ 11-3-118).
By Type
Usury Laws and Interest Rates
Promissory notes must adhere to the state’s usury laws outlined in Title 7, Chapter 4, Article 1 of the Official Code of Georgia Annotated.
- With a Contract ($3,000 – $250,000) (§ 7-4-2(a)(1)(A) and § 7-4-18(a)): Any rate of interest agreed to by the parties.
- With a Contract ($3,000 or Less) (§ 7-4-2(a)(2)): Not to exceed 16% per annum.
- Without a Contract (§ 7-4-2(a)(1)(A)): 7%.
- On Judgments (§ 7-4-12(a)): Equal to the federal prime rate on the date of judgment plus 3%.
- For Commercial Accounts (§ 7-4-16): 1.5% monthly rate applied after 30 days past due.
- For Installment Loans ($3,000 or Less) (§ 7-3-11(1)): 10%.
- For Pawnbrokers (§ 44-12-131(a)(4)): 25% per month for the first 90 days; thereafter, 12.5% per month (including shop charges).
