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A Connecticut promissory note is a binding document between a lender and a borrower that contains the terms of a loan arrangement between the parties. This document includes the contact information of both parties, the amount of money owed by the borrower, the amount of interest, the frequency of payments, and any late fees. Furthermore, the parties may negotiate whether the borrower will have to put up collateral to ensure the lender is protected against delinquent payment.
When both parties have signed the form, it becomes legally binding. Failure on the borrower’s part to pay back the money could result in legal action initiated by the lender.
Types (2)
Secured Promissory Note – This document sets forth the repayment terms of a loan secured by collateral.
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Unsecured Promissory Note – A loan agreement between two (2) parties that is not secured by any form of collateral.
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Laws
- Interest & Usury Laws: Chapter 673
- Usury Rate With Contract (excluding pawnbrokers) (§ 37-4): 12%
- Usury Rate Without Contract (§ 37-1): 8%
- Usury Rate for Loans (pawnbrokers only) (§ 21-44): For loans of $15 or less, the usury rate is 5% per month; for loans between $15 and $50, usury rate is 3% per month; and for loans over $50, usury rate is 2% per month.
- Usury Rate for Damages in Civil Actions/Arbitration (§ 37-3a(a)): 10%
- Usury Rate for Damages in Negligence Actions (§ 37-3b(a)): 10%
- Usury Rate for Hospital Services Debt (§ 37-3a(b)): 5%
- Usury Rate for Income Tax Refund Anticipation Loans (§ 42-480(d)): 60% for initial 21 days; 20% after 21 days.
- Usury Rate for Community Residential Facilities Loans (§ 17a-220(9)): 6%