Free North Carolina Promissory Note Template

A North Carolina promissory note is a signed, written promise to repay money on set terms. One number decides which rules apply. At $25,000 or less a published monthly ceiling governs, and above it the parties may agree on any rate.

Chapter 24 of the General Statutes covers interest. For a note, § 24-1.1 carries the contract rates, while § 24-2 supplies the penalty.

$25,000 or Less: the Published Rate

Under § 24-1.1(a)(1), a loan of $25,000 or less is capped at the rate set under subsection (c). Meanwhile, that rate is announced and published by the Commissioner of Banks on the fifteenth of each month.

The formula itself is specific. It takes the latest published noncompetitive rate for U.S. Treasury bills with a six-month maturity as of the fifteenth, adds six percent, and rounds to the nearest half percent. However, if that result falls below 16 percent, 16 percent applies instead.

Then timing follows from that. The announced rate is the maximum for loans made during the following calendar month, where the parties agree the rate won’t vary. An adjustable loan works differently. There the monthly ceiling is the greater of two figures. Those are the rate announced in the preceding calendar month, or in the month before the adjustment.

More Than $25,000: Any Agreed Rate

By contrast, § 24-1.1(a)(2) lifts the ceiling above that threshold. The parties may then contract in writing for any rate they agree.

How Interest May Be Computed

Subsection (b) adds a practical rule. Interest is not treated as excessive if it is computed monthly on the outstanding principal balance. It must also be collected no more than 31 days in advance of its due date. Nothing in the section allows interest on committed funds before they are disbursed.

A 36% Cap on Small Consumer Loans

Subsection (e)(3) sets a separate ceiling. Three conditions trigger it. The principal is under $5,000, the borrower is a natural person, and the debt is primarily for personal, family, or household purposes. Then the annual percentage rate cannot exceed 36 percent. That figure includes permitted origination fees as well as interest, and it is calculated under the federal Truth in Lending Act.

The lender forfeits the entire interest. Section 24-2 applies when a greater rate than the chapter permits is knowingly taken, received, reserved, or charged. That holds whether it happens before or after the interest accrues.

The forfeiture covers the whole interest the note carries, or that was agreed to be paid on it. Moreover, where a greater rate has already been paid, the payer or their legal representatives may recover twice the amount of interest paid.

Both remedies can be raised defensively. In an action to collect on the note, the party being sued may plead the penalty as a counterclaim. That means twice the interest paid, plus forfeiture of the entire interest.

Also, security gets special treatment. Say a debtor seeks relief against enforcement of security for a usurious loan. They are not required to pay, or offer to pay, the principal plus legal interest as a condition of that relief.

Tip: Look up the Commissioner of Banks rate for the month before you sign, not the month you agreed terms. That published figure is the ceiling your North Carolina promissory note is measured against.

As always, start from the principal, since it picks the rule. Use these steps:

1. Confirm the principal, and compare it with the $25,000 threshold.
2. For a smaller loan, look up the Commissioner’s published rate for the right month.
3. If a consumer loan runs under $5,000, work out the all-in APR and keep it under 36 percent.
4. Write the rate into the note, and say whether it can adjust.
5. Have the borrower and any cosigner sign, and date the note.
6. Give each party a copy, and keep a record of every payment.

Here too, the standard terms apply, with the rate basis spelled out.

• Lender and borrower names and addresses
• Principal amount
• Annual interest rate, and whether it varies
• How interest is computed, and when it is collected
• Any origination or other fees
• Loan purpose, personal or business
• Payment schedule and due date
• Collateral, if secured
• Signatures and dates

Start your North Carolina promissory note template with Document Genius’s step-by-step questionnaire, and have it ready to sign in minutes.