California Promissory Note PDF
California at a glance: Usury Limit: 10% per year (for personal/consumer loans) · Notarization Required: No (recommended for enforcement) · Governing Law: Cal. Civ. Code § 1916-1 et seq.
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Promissory Notes in California
California promissory notes are governed by the California Civil Code and the California Constitution (Article XV, Section 1), which establishes a strict usury limit of 10% per year for personal, consumer-purpose loans. Certain licensed lenders (such as banks, credit unions, and pawnshops) are exempt from this usury cap.
Under California law, if a lender charges a rate that violates the usury cap, the interest provision is void, and the lender may only recover the principal amount borrowed.
California Promissory Note — Quick Reference
| Requirement | California Rule |
|---|---|
| Usury Limit | 10% per year (for personal/consumer loans) |
| Notarization Required | No (recommended for enforcement) |
| Governing Law | Cal. Civ. Code § 1916-1 et seq. |
| Late Fee Cap | Must be reasonable (liquidated damages rules apply) |
California Legal Requirements
- Interest rate must not exceed 10% per year for non-exempt consumer loans.
- Late fees must represent a reasonable forecast of the lender's actual damages (Cal. Civ. Code § 1671).
- Borrower's signature is mandatory; co-signer signature is required if backing the loan.
- Note must clearly state the principal, interest rate, and payment schedule.
California Governing Laws
Read the full text of these laws at Cornell Law School's California legal resources or your state legislature's official website.