A Montana promissory note is a formal agreement for the loan of money between two parties. It details key aspects of the loan, including the interest rate, penalties for late payments, and the repayment method the borrower must follow.
It’s strongly advised that once all terms are mutually agreed upon, the signatures of both parties should be verified by a witness to ensure the agreement’s validity.
Types of Montana Promissory Notes
In Montana, you can choose between secured promissory notes (backed by collateral) or unsecured ones (based on the borrower’s promise alone).
Secured
Allows the lender to keep a valuable asset if the borrower does not repay the loan.
Unsecured
Usually offered to family, friends, or those with a good credit record, it doesn't require the provision of valuable assets for security.
Usury Laws and Interest Rates
The promissory note must adhere to Montana’s usury laws as outlined in Title 31, Chapter 1, Part 1:
- With a Contract (§ 31-1-107): 15% or 6% + federal funds rate three days before the agreement or as specified, this excludes rates for lenders under § 31-1-111.
- Without a Contract (§ 31-1-106): Legal interest rate of 10%.
- For judgments (§ 25-9-205): The interest rate for bank prime loans plus 3% unless specified differently in a contract.
- For Unlicensed Pawnbrokers (§ 31-1-401): 10%
Sample Montana Promissory Note
View a free sample Montana promissory note. Customize our template and download the final document in PDF or Word format.
