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A Washington promissory note is a contract that relays the terms and conditions whereby the lender provides a monetary loan to a borrower. In most cases involving this type of agreement, the lender and borrower will typically be related or familiar with each other as it is less formal than a typical loan agreement. Therefore, the document’s main purpose is to create physical proof of the agreement so that the lender can enforce repayment of the loan should they be required to do so.
The full contract will include the loan amount, interest rate, due dates of payments (or “payment” if a lump sum), and any applicable late fees. The contract may also require the borrower to provide security such as material collateral or a co-signer.
Types (2)
Secured Promissory Note – Relays the terms of a loan that is secured by collateral pledged by the borrower.
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Unsecured Promissory Note – A promissory note that isn’t backed by the borrower’s collateral.
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Laws
- Interest & Usury Laws: Chapter 19.52 – Interest-Usury
- Usury Rate with Contract (§ 19.52.020(1)): 12% or 4% over the federal 26-week treasury bill rate, whichever is greater.
- Usury Rate without Contract (§ 19.52.010(1)): 12%
- Usury Rate for Loan Setup Charges (§ 19.52.020(2)(b)): 4% ($15 maximum)
- Usury Rate for Judgments with Contracts (§ 4.56.110(1)): The interest rate will be the same as agreed in the contract.
- Usury Rate for Child Support Judgments (§ 4.56.110(2)): 12%
- Usury Rate for Tortious Conduct of a Public Agency Judgments (§ 4.56.110(3)(a)): 2% over the federal 26-week treasury bill rate
- Usury Rate for Tortious Conduct of an Individual/Entity Judgments (§ 4.56.110(3)(b)): 2% over the federal prime rate
- Usury Rate for Unpaid Student Debt Judgments (§ 4.56.110(4)): 2% over the federal prime rate
- Usury Rate for Unpaid Consumer Debt Judgments (§ 4.56.110): 9%
- Usury Rate for Medical Debt Prejudgments (§ 19.52.010(2), § 19.52.020(4)): 9%