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A Maine promissory note is a form in which an individual (the borrower) promises to repay a debt to a loan provider (the lender) by a specified date. Lenders typically use promissory notes for short-term financing, such as student loans and vehicle loans, as well as transactions involving real estate mortgages. The conditions of repayment are recorded in the note, outlining the principal debt, deadlines, interest rate, and repercussions for late payment.
The obligations set forth in the document are legally binding upon the borrower. If the borrower fails to make payment, the lender can file a lawsuit for a breach of contract, and they may be entitled to ownership of any asset used as security for the loan.
Types (2)
Secured Promissory Note – Establishes a money lending arrangement in which the borrower offers collateral to secure the loan.
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Unsecured Promissory Note – An unsecured note does not require any assets or property from the borrower to serve as collateral.
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Laws
- Interest & Usury Laws: Title 9-B § 432 & Title 9-A, Art. 2
- Usury Rate for Written Loans by Financial Institution (§ 432(1)): No stated maximum.
- Usury Rate for Non-Written Loans by Financial Institution (§ 432(1)): 6%
- Usury Rate for Consumer Loans (§ 2-401(2)): *The finance charge for a consumer loan cannot exceed the following:
- 30% on the unpaid balance for loans $2,000 or less.
- 24% on the unpaid balance for loans more than $2,000 but less than $4,000.
- 18% on the unpaid balance for loans more than $4,000.
- 18% on the entire loan amount for loans more than $8,000.
- Usury Rate for Pawnbrokers (§ 3963(1)): 25% per month for loans $500 or less; 20% for loans more than $500.
- Usury Rate for Prejudgment Interest (§ 1602-B): The one-year United States Treasury bill rate + 3%, unless there is a contract or note establishing a different rate.
- Usury Rate for Postjudgment Interest (§ 1602-C): The interest rate cannot exceed the greater of the following:
- The one-year United States Treasury bill rate + 6%; or
- The rate established in any contract or note.
*Consumer loans rates do not apply to the following transactions: