A North Dakota promissory note details the terms by which a borrower will repay a loan issued to them by a lending party. The note may be secured, meaning the borrower puts up collateral for the sum allocated, or it can be unsecured, meaning that no collateral is provided (but usually a higher interest rate is charged). The document should include the contact information of all parties involved, the amount issued, the interest rate to be paid, and provisions that detail the consequences for late payment or default.
A promissory note may benefit those who cannot secure a loan from a traditional lender, such as a bank. For example, a borrower can use this form to obtain a small loan from someone they know personally, allowing both parties to rest assured knowing that the terms of the money lending are delineated and leave no room for misinterpretation. This agreement may be potentially risky to the lender; therefore, a co-signer may be designated to assure the borrower’s obligations are met.
Secured Promissory Note – A lending agreement where a borrower pledges collateral to a lender.
Unsecured Promissory Note – This document states a borrower’s promise to repay a loan without pledging any collateral.
- Interest & Usury Laws: Chapter 47-14: Loans of Money
- Usury Rate with Contract (§ 47-14-09): The 6-month US Treasury Bills rate + 5.5%; however, the maximum rate ceiling cannot be less than 7%. The current rate through 2025 can be found here. The following exceptions apply:
- Loans exceeding $35,000
- A transaction under $10,000 with a licensed pawnbroker
- Loans made to a trust, foreign or domestic corporation or LLC, cooperative corporation, or association
- Loans made by a state or federally regulated lending institution
- Loans made to a partnership, LLC, or association that files a state or federal income tax return
- Usury Rate without Contract (§ 47-14-05): 6%
- Usury Rate for Monetary Judgments (§ 28-20-34): The prime rate + 3%