A North Carolina promissory note serves as a binding agreement that states the terms of loan repayment by an individual or entity. This document is simpler and more flexible than a loan agreement, but more involved than an IOU. The provisions generally featured in such a form include the due date, interest rate, installment payment schedule, late fees, and security (collateral).
If the borrower defaults on the note, they may be expected to pay the lender’s attorney fees if an action is filed against them; however, as per N.C. Gen. Stat. § 6-21.2(1), North Carolina law limits these fees to a maximum of fifteen (15) percent of the outstanding loan balance.
Secured Promissory Note – This document sets forth the terms and conditions of a loan agreement secured by collateral.
Unsecured Promissory Note – A lending agreement where the financier does not require collateral to be pledged by the borrower.
- Interest & Usury Laws: Chapter 24 – Interest
- Usury Rate with Contract (N.C. Gen. Stat. § 24-1.1(a)):
- For loans less than $25,000: Set by the North Carolina Association of Banks on the 15th of each month (it has been 16% since 1984).
- For loans more than $25,000: No limit
- Usury Rate without Contract (N.C. Gen. Stat. § 24-1): 8%
- Usury Rate for Monetary Judgments (N.C. Gen. Stat. § 24-5(a)): Contract rate, or 8% if no rate specified.