What Is a New York Promissory Note?
A New York promissory note is a compact agreement signed by both lender and borrower specifying loan repayment terms, including the amount, schedule, and interest rate.
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 are regulated by the Consolidated Laws of New York, Chapter 2—Banking, and Title 5—Interest and Usury; Brokerage On Loans.
Statute of Limitations: Six years (Civil Practice §213).
Types of New York Promissory Notes: Secured vs. Unsecured
In New York, choosing between a secured or unsecured note can affect everything from repayment terms to legal recourse. It’s a key decision for both casual and formal lending.
Secured New York Promissory Note
Protects the lender by establishing collateral items in advance, to be secured in case the borrower defaults, before the agreement is finalized.
Unsecured New York Promissory Note
Eliminates the need for the borrower to supply collateral to the lender.
Usury Laws and Interest Rates in New York
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.
Sample New York Promissory Note
View a free example of a New York promissory note to learn its structure. When you’re ready, create your own via our document editor. Download in PDF or Word format.
