An Illinois promissory note is a legal document used to record a loan transaction between a lender and a borrower. It outlines the terms and conditions of the loan, including the repayment timeframe, interest rate, installment amount (if any), and penalties for late payment.
Additionally, the note may be backed by collateral, which provides extra security for the lender. By documenting the loan terms in a promissory note, both parties can ensure a clear understanding of the agreement, and the lender is protected in case of default.
Laws: 810 ILCS 5 – Uniform Commercial Code and the State’s Interest Act govern the creation and implementation of promissory notes.
Statute of Limitations: Ten years.
By Type
Usury Laws and Interest Rates
Promissory notes must comply with Illinois’s usury laws, which you can find in 815 ILCS 205/4:
- With Contract (815 ILCS 205/4): *9% APR, unless otherwise authorized by the Predatory Loan Prevention Act (PLPA), in which case the interest rate cannot exceed 36% APR. **The following transactions are subject to the PLPA:
- Consumer Loans (205 ILCS 670/15(a))
- Payday Loans (815 ILCS 122/2-5(e-5))
- Retail Installment Contracts (815 ILCS 405/27)
- Retail Charge Agreements (815 ILCS 405/28)
- Vehicle Retail Installment Contracts (815 ILCS 375/21)
- For Money Due on Written Instrument (815 ILCS 205/2): 5%
- For Monetary Judgments (735 ILCS 5/2-1303(a)): 9%, or 6% if the debtor is a unit of local government (e.g., county, township, municipality).
- For Loan or Forbearance (815 ILCS 205/1): 5%
- For Pawnbrokers (205 ILCS 510/2): 3% per month.
* Banks and savings banks may charge any rate of interest, unless prohibited by the PLPA, for transactions listed in 815 ILCS 205/4(1)(a) – (n).
**The PLPA does not apply to banks, savings banks, savings and loan associations, credit unions, and insurance companies.
