Free Kentucky Promissory Note Template

A Kentucky promissory note is a signed, written promise to repay money on set terms. In Kentucky the size of the loan sets the ceiling, and $15,000 is the line that matters.

Chapter 360 of the Kentucky Revised Statutes covers interest and usury. For a note, § 360.010 sets the rates, while § 360.020 supplies the penalty.

8% Without a Written Agreement

Under § 360.010(1), the legal rate of interest is eight percent a year, except as KRS 360.040 provides. From there, the parties may agree in writing to more, within the limits below.

Loans of $15,000 or Less

For a written contract where the original principal is $15,000 or less, § 360.010(1)(a) caps the rate at the lower of two figures. One is nineteen percent. The other is four percentage points above a federal benchmark. That benchmark is the discount rate on ninety-day commercial paper at the Federal Reserve Bank for the district where the transaction is consummated.

Loans Above $15,000

However, above that threshold § 360.010(1)(b) allows any rate agreed in writing. Subsection (2) then binds the parties, and anyone who assumes or guarantees the obligation, to the rate expressed in the document. Subject to KRS 371.190, no state law limiting interest rates applies to such an agreement.

Interest After Default

Say a written contract specifies a rate. Then § 360.010(3) lets the party entitled to be paid recover interest after default at that pre-default rate. A variable rate keeps adjusting as the contract provides until judgment. Meanwhile, subsection (4) covers a contract that specifies no rate: there, interest after default runs at the legal rate until judgment.

The entire interest is forfeited. Section 360.020(1) applies where a rate above what § 360.010 allows is knowingly taken, received, reserved, or charged.

The forfeiture covers all the interest the note, bill, or other evidence of debt carries, or that was agreed to be paid on it. Say the borrower already paid the excessive rate. Then they, or their legal representatives, may recover twice that interest from the creditor who took it. That action has to start within two years from the time the usurious transaction occurred.

One smaller rule shapes the accounting. Under subsection (2), a partial payment on a debt bearing interest is applied first to the interest then due.

Tip: The threshold looks at the original principal, so check it before picking a rate. A $14,000 Kentucky promissory note and a $16,000 one follow different rules.

As a rule, start from the principal, because it decides the ceiling. Work through these steps:

1. Confirm the original principal amount, and compare it with the $15,000 threshold.
2. For $15,000 or less, check the Federal Reserve discount rate on ninety-day commercial paper and compare it with nineteen percent.
3. Write the agreed rate into the note, since a rate above eight percent needs a written agreement.
4. Set out what happens to interest after default.
5. Have the borrower sign, along with any guarantor, and date the note.
6. Give each party a copy, and apply payments to interest first.

Here too, the standard terms apply, with the principal stated precisely.

• Lender and borrower names and addresses
• Original principal amount
• Annual interest rate, in writing
• Interest rate after default
• Payment schedule and due date
• Guarantor details, if any
• Collateral, if secured
• Signatures and dates

With Document Genius, a guided form builds your Kentucky promissory note template in minutes, ready to download or e-sign.