A South Dakota promissory note is a legally binding document that relays the terms whereby one party loans funds to another. The terms will include the start date of the loan, the principal sum (the amount of money lent), interest rate, repayment schedule, and (if applicable) late fees or collateral. A co-signer may be required to sign the contract to guarantee payment in the event that the borrower is unable to fulfill the contract. Although the document isn’t officially recorded, it may be used as evidence if legal action is required to enforce the agreement.
South Dakota has several categories of maximum interest rates. Refer to the table below to determine the appropriate usury rate for a promissory note.
Secured Promissory Note – Allows the lender to receive collateral as a guarantee of compensation.
Unsecured Promissory Note – A loan in which the lender doesn’t receive any security from the borrower.
- Interest & Usury Laws: Chapter 54-3 – Interest and Usury
- Usury Rate with Contract (§ 54-3-4): No limit
- Usury Rate without Contract (§ 54-3-4, § 54-3-16(3)): 12%
- Usury Rate for Judgments and Statutory Liens (§ 54-3-5.1, § 54-3-16(2)): 10%
- Usury Rate for Support Debts or Judgments (§ 25-7A-14, § 54-3-16(4)): 1% or less
- Usury Rate for Inverse Condemnation Actions (§ 54-3-5.1, § 54-3-16(1)): 4.5%
- Usury Rate for Past Due Money (§ 54-3-5, § 54-3-16(6)): 15%
- Usury Rate for Past Due Money on Bills, Statements, and Invoices (§ 54-3-5): 18%