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A Hawaii promissory note details the conditions of one’s promise to repay a debt owed to a money lender. By signing the note, the borrower agrees to reimburse the lender by a specific due date along with any interest accrued. The promissory note may also stipulate fees to be applied on each installment the borrower fails to pay on time.
This promissory note can be constructed with or without the inclusion of a security provision. With a security provision, the borrower would offer their property as collateral, or “security,” for the loan. Should the borrow violate the contract irremediably, ownership of the security will transfer to the money lender as a contribution to the unpaid balance.
Types (2)
Secured Promissory Note – Under the terms of a secured promissory note, the borrower must pledge an asset as collateral before receiving funds.
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Unsecured Promissory Note – This promissory note does not require the borrower to provide collateral to the lender.
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Laws
- Interest & Usury Laws: Title 26, Chapter 478
- Usury Rate in General (§ 478-2): 10%, unless there is a written contract fixing a different rate, in which case the interest rate cannot exceed the contract rate.
- Usury Rate for Judgments (§ 478-3): 10%
- Usury Rate for Home Business Loans (§ 478-4): *1% per month or 12% per year.
- Usury Rate for Consumer Credit Transactions (§ 478-4): *1% per month or 12% per year (excluding credit card agreements).
*If the lender is a financial institution other than a credit union or trust company, the maximum interest rate is 2% per month or 24% per year.