By Type (2)
Secured Promissory Note – Sets aside a physical item such as a home, vehicle, or boat that is given to the lender if the borrower enters into default and cannot recover. The item in security should be in similar value to that of the balance to minimize loss to the lender.
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Unsecured Promissory Note – Does not include a section on security. This results in the lender being far more vulnerable, as he or she has the possibility of losing the loaned balance. The lender should take the time to screen potential borrowers to ensure they have a strong credit history.
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Usury Statute
The legal rate of interest shall be six percent (6%) in the absence of any contract as to the rate of interest, and by contract parties may agree to any rate as may be authorized by law, now in effect or hereinafter enacted.[1]