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An Indiana promissory note is a legal document in which a loan recipient promises to pay back the borrowed amount to the moneylender. Unlike an “IOU,” a promissory note contains specific terms for loan repayment, such as an installment schedule, rate of interest, late fees, collateral (called “security”), and the date by which the principal amount must be paid in full.
A promissory note may designate a co-signer, who is an individual that is responsible for the note obligations if the borrower fails to make payments. Co-signing provides assurance to the lender that the loan will be repaid and is often required for borrowers with low income or poor credit.
Types (2)
Secured Promissory Note – A lending agreement in which the borrower pledges collateral to the lender.
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Unsecured Promissory Note – Contains no loan protection; collateral from the borrower is not required.
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Laws
- Interest & Usury Laws: Title 24, Art. 4.5, Ch. 3
- Usury Rate for Unsupervised Loan (IC 24-4.5-3-201(1)): 25%
- Usury Rate for Supervised Loans (IC 24-4.5-3-508(2)): 15%-36% depending on loan amount.
- Usury Rate for Monetary Judgments (IC 24-4.6-1-101): 8%
- Usury Rate for Monetary Judgements in Absence of Agreement (IC 24-4.6-1-102): 8%
- Usury Rate for Monetary Judgements Against State (IC 34-54-8-5): 6% starting on the forty-fifth (45th) day after judgment.