A New York promissory note is a compact agreement specifying loan repayment terms, including the amount, schedule, and interest rate, signed by both lender and borrower.
It encompasses clear terms and consequences for late or incomplete payments, ensuring an understanding of obligations and penalties, such as late fees, legal action, or collateral seizure. Charging interest over 16% may lead to civil usury charges, and exceeding 25% risks criminal charges, safeguarding against excessive lender rates.
Laws: Promissory notes fall under the Consolidated Laws of New York Chapter 2 – Banking & Title 5 – Interest and Usury; Brokerage On Loans.
Statute of Limitations: Six years (Civil Practice §213).
By Type
Usury Laws and Interest Rates
The promissory note must adhere to New York’s usury laws as outlined in Chapter 2 & Title 5 of the Consolidated Laws of New York:
- General (Banking §14-A): 16% per annum.
- For Registered Broker/Dealer Debit Balances (§ 5-525): Prime rate for short-term commercial loans plus 8%, applicable if the debit balance is due on demand and secured.
- For Judgments (§ 5004): 9% per annum, except consumer debt judgments after 2021 accrue interest at a rate of 2% per annum.
