TX · PROM-NOTE · Updated July 2026 · Free
Texas Promissory Note
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Texas at a glance: Usury Limit: 18% per year (standard cap) · Notarization Required: No (recommended) · Governing Law: Tex. Fin. Code § 302.001
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Overview
Promissory Notes in Texas
Texas promissory notes are governed by the Texas Finance Code. Texas has a statutory usury ceiling of 18% per year for written agreements (Tex. Fin. Code § 302.001). Under specific market conditions, the legal ceiling can adjust up to 24% but defaults to 18% for standard contracts.
Charging interest above the statutory ceiling carries severe penalties in Texas, including forfeiture of all interest and potential liability for three times the amount of interest charged.
Key Facts
Texas Promissory Note — Quick Reference
| Requirement | Texas Rule |
|---|---|
| Usury Limit | 18% per year (standard cap) |
| Notarization Required | No (recommended) |
| Governing Law | Tex. Fin. Code § 302.001 |
| Late Fee Cap | Reasonable and contracted |
Legal Requirements
Texas Legal Requirements
- Interest rates cannot exceed 18% per year unless a specific statutory exception applies.
- If no interest rate is specified in a contract, the statutory rate defaults to 6% per year (Tex. Fin. Code § 302.002).
- Borrower must sign the note to confirm liability.
Governing Laws
Texas Governing Laws
Tex. Fin. Code § 302.001
Texas Interest Ceiling
Establishes the maximum interest rate of 18% per year for written contracts.
Tex. Fin. Code § 305.001
Usury Penalties
Outlines civil penalties for usurious loans, including forfeiture of interest and attorney fees.
Read the full text of these laws at Cornell Law School's Texas legal resources or your state legislature's official website.
Questions & Answers
Texas Promissory Note — Frequently Asked Questions
What is the legal interest limit on loans in Texas?
The standard maximum interest rate on written contracts in Texas is 18% per year. If no rate is written in the contract, the default legal rate is 6%.
What are the penalties for charging too much interest in Texas?
Texas usury laws are strict. If you charge more than the legal limit, you can be forced to forfeit all interest, pay a penalty of three times the usurious interest, and cover the borrower's legal fees.