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New York Promissory Note
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New York at a glance: Civil Usury Limit: 16% per year · Criminal Usury Limit: 25% per year · Governing Law: N.Y. Gen. Oblig. Law § 5-501
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Overview
Promissory Notes in New York
New York promissory notes are governed by the General Obligations Law and Banking Law. New York has a civil usury cap of 16% per year (N.Y. GOL § 5-501). Charging an interest rate above 16% is civil usury, making the entire loan contract void and unenforceable.
Interest rates exceeding 25% per year constitute criminal usury under New York Penal Law, which is a class E felony.
Key Facts
New York Promissory Note — Quick Reference
| Requirement | New York Rule |
|---|---|
| Civil Usury Limit | 16% per year |
| Criminal Usury Limit | 25% per year |
| Governing Law | N.Y. Gen. Oblig. Law § 5-501 |
| Default Legal Rate | 6% (if not written) |
Legal Requirements
New York Legal Requirements
- Interest rates must remain below 16% per year for civil loans.
- Notes charging above 16% are completely void; the lender cannot recover principal or interest.
- Late fees must comply with New York state court rules on liquidated damages (must be reasonable).
Governing Laws
New York Governing Laws
N.Y. Gen. Oblig. Law § 5-501
Rate of Interest
Sets the maximum civil interest rate at 16% per year on loans of money.
N.Y. Penal Law § 190.40
Criminal Usury
Establishes that charging interest in excess of 25% per year is a felony.
Read the full text of these laws at Cornell Law School's New York legal resources or your state legislature's official website.
Questions & Answers
New York Promissory Note — Frequently Asked Questions
What is the maximum interest rate allowed in New York?
The maximum civil interest rate on loans in New York is 16% per year. Rates between 16.01% and 25% are civilly usurious, and rates above 25% are criminally usurious.
Can a lender collect principal if a New York loan is usurious?
No. In New York, a civilly usurious loan is completely void. The lender loses the right to collect both the interest and the principal amount.