A Hawaii promissory note is a formal agreement delineating the repayment terms for a debt owed to a lender. Upon signing, the borrower commits to repaying the lender by a specified deadline, including accrued interest, as outlined in the note.
This legally binding document defines loan particulars, covering payment plans and penalties for late or missed installment payments. Moreover, it can be structured as either secured or unsecured, offering adaptable options to suit the needs of both parties involved.
Laws: Commercial promissory notes in Hawaii are regulated by Article 3 of the Uniform Commercial Code (490:3) and Hawaii common law. Additionally, they are subject to regulations concerning collections and interest rates.
Statute of Limitations: Six years (§ 657-1(1)).
Usury Laws and Interest Rates
Promissory notes must comply with the state’s usury laws defined by the Hawaii Revised Statutes, Title 26, Chapter 478.
- In General (§ 478-2): 10%, unless a written contract establishes a different rate, in which case the interest rate cannot surpass the contract rate.
- For Judgments (§ 478-3): 10% for civil suits.
- For Home Business Loans (§ 478-4): *1% per month or 12% per year unless the creditor is regulated by state law, then not to exceed 2% per month or 24% per year.
- For Consumer Credit Transactions (§ 478-4): *1% per month or 12% per year, with the exception of credit card agreements.
*When the lender is a financial institution other than a credit union or trust company, the highest permissible interest rate is 2% per month or 24% per year.
