A Texas promissory note is a document that establishes the terms of a monetary loan provided by a lender to a borrower. The agreement’s terms will include the sum of the loan, the timing of payments, the interest rate, and any late fees. It is also common for the borrower to promise personal property as a security on the loan. For further security, the lender may require a co-signer to guarantee payment in the event that the borrower is unable to do so.
Once both parties have signed the promissory note, the funds will be considered received by the borrower who will be required to fulfill the terms of repayment.
Secured Promissory Note – A personal loan with the borrower’s property promised as security on repayment.
Unsecured Promissory Note – An agreement that doesn’t allow the lender to obtain any collateral from the borrower.
- Interest & Usury Laws: Subtitle A – Interest Rate
- Usury Rate with Contract (§ 302.001(b)): 10%
- Usury Rate without Contract (§ 302.002): 6%
- Usury Rate for Money Judgments with Contract (§ 304.002(2)): 18% or the amount specified in contract, whichever is lesser.
- Usury Rate Post Judgment (§ 304.003(c)):
- The federal prime rate if the prime rate published by the Board of Governors of the Federal Reserve System is between 5% and 15%.
- If the prime rate published by the Board of Governors of the Federal Reserve System is less than 5% – 5%
- If the prime rate published by the Board of Governors of the Federal Reserve System is more than 15% – 15%
- Periodic Usury Ceiling (§ 303.003, § 303.005, § 303.009, Texas Credit Letter): 18%
- Usury Ceiling for Credit Extensions (§ 303.009(c)): 28%
- Usury Ceiling for Open-End Account Credit Agreements (§ 303.009(d)): 21%