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An Alabama promissory note is a legally binding contract used for lending money. The form establishes that money was lent from a lender to a borrower on the basis that the balance (plus interest) be paid back over time. The agreement confirms many key points of the loan in writing, including the contact information of the parties, the amount borrowed, the interest rate, the value of each payment, and the final date of payment. Although a promissory note is not as detailed as an official loan agreement, the parties are still legally bound to the note, and any default by the borrower could result in a breach of contract lawsuit.
Types (2)
Secured Promissory Note – Requires the borrower to put up assets as collateral.
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Unsecured Promissory Note – Doesn’t require the borrower to provide valuable belongings as collateral.
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Laws
- Interest & Usury Laws: Title 8, Chapter 8
- Usury Rate With a Contract (§ 8-8-1): 8%
- Usury Rate Without a Contract (§ 8-8-1): 6%
- Usury Rate for Loans Secured by Savings Account (§ 8-8-1.2): 2% in excess of the interest rate (rate of return) applied to the account.
- Usury Rate for Loans ($2,000+) (§ 8-8-5): No maximum
- Usury Rate for Judgments (§ 8-8-10): 7.5% or rate agreed by contract.
- Usury Rate for Board of Education Loans ($100,000+) (§ 8-8-4): 15%