An Iowa promissory note is a written agreement between a borrower and a lender that outlines the terms of a loan. It specifies the amount borrowed, the interest rate, and the date the borrower is expected to repay the loan. Additionally, the note may include provisions for securing the loan, late payment fees, and a repayment schedule.
By signing the note, the borrower becomes legally obligated to repay the loan according to the terms outlined in the document. Failure to comply with these terms may result in legal action by the lender to recover the total amount owed.
Laws: Iowa Code 2024, § 554.9408 governs the creation and implementation of promissory notes.
Statute of Limitations: Ten years.
By Type
Usury Laws and Interest Rates
Promissory notes must comply with Iowa’s usury laws, which you can find in Iowa Code § 535.2(3)(a):
- In General (§ 535.2(1) & § 535.2(3)(a)): *Unless agreed upon in writing, the interest rate shall not exceed the limit set by the Superintendent of Banking and will be 5% per year.
- For Monetary Judgments (§ 668.13(2) & § 668.13(3)): The contract rate cannot exceed the limit set by § 535.2. The maximum interest rate is 2% above the one-year treasury constant maturity without a contract.
*Loans for real estate, business, agriculture, or other purposes can have any interest rate under § 535.2(2).
