A Vermont promissory note is a formal declaration of a financial obligation where one party acknowledges a sum to another. This document outlines the loan’s details, including the borrowed amount, repayment conditions, and interest rates. It may also include potential consequences for late payments or non-payment, including additional interest, late fees, or legal repercussions.
This note provides clarity, allowing both parties to reference it so they understand their rights and obligations. It reminds the borrower of their commitment and holds them accountable in case they default.
Laws: Promissory notes fall under Title 9A, Article 3 of the Vermont Statutes Annotated.
Statute of Limitations: Six years (9A V.S.A. §3-118; Clark v. Distefano, 195 A. 3d 379, 2018 VT 82 (2018)).
By Type
Usury Laws and Interest Rates
Your promissory notes must follow the state’s usury laws, which you can find in the Vermont Statutes Annotated Title 9, Chapter 4 (Interest):
- Usury Rate (§ 41a(a)): 12%.
- For Loans with Vehicle as Collateral (§ 41a(b)(4)):
- If the vehicle is the current model year or one year older: 18%.
- If the vehicle is older than the current or previous model year: 20%.
- For Credit Cards (§ 41a(b)(3)): Any rate to which the borrower and lender agree.
- For Loans Secured by Subordinate Lien (§ 41a(b)(7)): 18%.
- For Installment Loans (§ 41a(b)(5)): Interest is at 24% per annum for the first $1,000 the lender loans to the borrower. The interest decreases to 12% per annum for any amount greater than $1,000 or an 18% annual percentage rate (APR) on the total amount (whichever is lesser).
