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A Kansas promissory note is a legal document in which a debtor, or “borrower,” agrees to pay back a sum of money to a lender. Promissory notes demonstrate the existence of a debt and outline specific conditions for repayment. Fundamental components of the document include the personal information of both parties, principal loan amount, due date, interest rate, payment schedule, and the borrower’s signature.
A borrower who fails to comply with the terms designated in the promissory note will risk losing any assets used to secure the loan, such as their real estate or personal property. Debt collectors hired by the lender may also demand payment from the borrower. If all collection efforts fall short, the lender can sue the borrower to pursue a monetary judgment.
Types (2)
Secured Promissory Note – Establishes payment terms for a loan that has been secured by the borrower with collateral.
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Unsecured Promissory Note – This type of promissory note doesn’t require collateral and should be reserved for low-risk borrowers.
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Laws
- Interest & Usury Laws: Ch. 16, Article 2
- Usury Rate in General (§ 16-201): 10%, unless another rate is agreed upon, in which case the interest rate cannot exceed the agreed-upon rate.
- Usury Rate for Contracts (§ 16-207(a)): 15%, unless a higher interest rate is authorized by § 16-207(e) et seq.
- Usury Rate for Judgments (§ 16-204(e)(1)): 4% above the *federal discount rate.
- Usury Rate for Judgments on Contract (§ 16-205(a)): The contract rate applies.
*The federal discount rate is the interest rate on loans issued to commercial banks and other depository institutions by the Federal Reserve Bank.