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 Chapter 2 – Banking & Title 5 – Interest and Usury; Brokerage On Loans.
Statute of Limitations: Three years.
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:
- General (Banking §14-A): 16%
- 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%.
