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A Pennsylvania promissory note is an agreement whereby a borrower commits to repaying money from a lender by a specified date. The document is more formal than an “IOU” and more flexible than of a loan contract, yet it is still legally binding. The form should include the principal sum, how payments will be divided, the interest rate, and any real property the borrower puts up as collateral (if applicable).
In the event that a borrower pays an interest rate in excess of the legal state limit, they may recover triple the amount of excess interest or charges with a successful lawsuit against the lender.
Types (2)
Secured Promissory Note – A moneylending agreement whereby a borrower puts up collateral as security.
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Unsecured Promissory Note – Used when a moneylender does not require a borrower to use their assets to secure a loan.
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Laws
- Interest & Usury Laws: Loan Interest and Protection Law (Usury Law)
- Usury Rate with Contract (41 Pa. Stat. § 201): No limit
- Usury Rate for loans of $50,000 or less (41 Pa. Stat. § 201): 6%, or as stated in the contract
- Usury Rate for Monetary Judgments (42 Pa. C.S. § 8101): 6% from the date of the verdict or judgment unless another amount is agreed upon by both parties.