A Delaware promissory note defines the terms of an arrangement where a lender loans a sum of money to a borrower with the latter promising to pay back the former by a certain date. The note establishes the amount of the loan, the amount of interest charged, the frequency of payments, any late fees that apply, and collateral (if any).
Any individual or company can issue a promissory note, but typically they are used by lenders other than financial institutions loaning smaller sums of money. Unlike a loan agreement, a promissory note does not include default provisions. These provisions detail what will happen if the borrower fails to pay back the lender, which may include a lawsuit, home foreclosure, asset seizure, vehicle repossession, etc.
- Interest & Usury Laws: Title 6, Chapter 23
- Usury Rate (§ 2301(a)): In excess of 5% over the Federal Reserve discount rate (currently 0.25%).
- Usury Rate for Unsecured Loans over $100,000 (§ 2301(c)): No maximum.
- Usury Rate for Life Insurance Policy Loans (§ 2911(b)(1)): Over 8% or an adjustable maximum interest rate as permitted by law.
- Usury Rate for Secured Pawnbroker Loans (§ 2316): Over 30%/month