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A New Mexico promissory note is a contract between a borrower of money and the lender that records the standard terms for repayment. The document doesn’t need to be filed with any government body, but is instead kept in each party’s personal records. Among other key provisions, the form will include the payment schedule, the loan maturity date, and the interest rate applied to the principal.
Promissory notes are less complicated than formal loan agreements, and are more often used between individuals and entities than in association with financial institutions. Still, once signed, the note’s conditions are legally binding upon the borrower, and it can be used as evidence of the loan in court if they fail to meet their obligations.
Types (2)
Secured Promissory Note – A debt repayment agreement between two (2) parties where the borrower pledges personal assets as collateral.
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Unsecured Promissory Note – Two (2) parties may use this document to agree to repayment terms on a loan that is not secured by collateral.
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Laws
- Interest & Usury Laws: Chapter 56, Article 8
- Usury Rate in General (§ 56-8-3): 15%, in absence of written contract.
- Usury Rate for Loans to Corporations/Business Entities (§ 56-8-9(B)): No maximum except for loans made for mortgages relating to farms or agriculture (§ 56-8-10).
- Usury Rate for Judgments (§ 56-8-4): 8.75%, with the following exceptions*:
- Judgment rendered on written instrument with different rate
- Judgment due to tortious conduct, bad faith, intentional/willful acts (15%)
- Judgment wherein the plaintiff unreasonably delayed the trial’s adjudication (10%)
- Judgment after defendant made reasonable settlement offer to the plaintiff (10%)
- Usury Rate for Open Accounts (§ 56-8-5): 15%, unless higher rate is set by agreement.
*In all unpaid child support cases, the max rate is set at 8.75%.