A New Jersey promissory note is a legal agreement that outlines the repayment terms of a loan between a borrower and lender, detailing the amount, repayment schedule, and consequences of default or late payments.
To minimize risk, lenders may secure the loan with the borrower’s collateral or insist on a co-signer, providing a safeguard through possible collateral seizure or legal action against non-compliant borrowers. This document highlights the borrower’s obligation and the protective measures for lenders.
Laws: Promissory notes fall under New Jersey Statutes, Title 31.
Statute of Limitations: Six years (§2A:14-1).
By Type
Secured
Allows the lender to keep a valuable asset if the borrower does not adhere to the terms of loan repayment.
Unsecured
Usually accessible to those with good credit scores or solid personal networks, this choice does not require collateral.
Usury Laws and Interest Rates
The promissory note must adhere to New Jersey’s usury laws as outlined in Title 31:
- With a Contract (§ 31:1-1(a)): 16% per annum.
- Without a Contract (§ 31:1-1(a)): 6% per annum.
- For Judgments ≤$15,000 (Rule 4:42-11(a)(ii)): Rate equals New Jersey Cash Management Fund‘s previous year’s average return.
- For Judgments >$15,000 (Rule 4:42-11(a)(iii)): Rate equals Fund’s average return from the previous year + 2%.
