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A Rhode Island promissory note is a contract that establishes the terms of a loan repayment between a lender and borrower. Promissory notes are generally used to seek out loans from sources other than financial institutions. The document should detail repayment terms and deadlines, the interest rate, and provisions detailing what should happen in the event of non-payment.
It should be noted that as per § 6-26-3, any lender that knowingly violates the maximum rate of interest may be charged with criminal usury and face a prison sentence of up to five (5) years.
Types (2)
Secured Promissory Note – An agreement whereby a lender grants a loan to a borrower who puts up personal assets as collateral.
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Unsecured Promissory Note – A lending agreement that does not require any form of collateral by the borrower.
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Laws
- Interest & Usury Laws: Chapter 26: Interest and Usury
- Usury Rate in General (§ 6-26-2(a) & (b)): 21%, or the domestic prime rate + 9%
- Usury Rate for Small Loans (§ 19-14.2-8):
- Loans up to and including $300: 3%
- Loans exceeding $300 and up to $800: 2.5%
- Loans exceeding $800: 2%
- Usury Rate for Monetary Judgments (§ 6-26-1): $12 on every $100 for one (1) year unless another rate is stipulated.