Maine Loan Agreement
A Maine loan agreement sets the loan terms and interest. Maine imposes no general usury cap on a private written loan, so the parties set the rate in writing.
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Introduction
A loan agreement in Maine is a written contract to lend money and be repaid with interest, and because Maine imposes no general usury cap on a private written loan the parties set the rate themselves in writing. Maine is unusual on interest: it sets no general usury ceiling on a private written loan, so the parties may agree in writing to the rate that fits their deal. The only fixed legal rate in the banking code is 6 percent per year, and it applies to a loan made by a financial institution when there is no written agreement setting a different rate (Title 9-B Section 432); a private lender is not a financial institution, so that rate is a useful reference rather than a cap. Maine does cap consumer credit, but only for a supervised loan, a consumer loan whose finance charge exceeds 12 and one quarter percent per year made by a lender regularly in the business (Title 9-A). Making an occasional private loan does not by itself require a license: a supervised-lender license is needed only by a person engaged in the business of making loans, which Maine measures as more than 25 loans a year (Title 9-A Section 2-301), so a one-off personal loan is not licensed. Because there is no fixed cap, stating the rate in writing matters even more. A sound Maine loan agreement names the parties, the principal, the interest rate as a number, the repayment schedule, any late fee, and what counts as default. It should include an acceleration clause, which lets the lender demand the entire unpaid balance at once if the borrower misses payments. Put the terms in writing: a civil action on the debt must generally be filed within six years (Title 14 Section 752). DocDraft builds your Maine loan agreement from your facts, with attorney review available before you sign.
Key Things to Know
- 1
In Maine, a loan agreement is the signed record of the amount, the rate, and the repayment dates, and with no general interest ceiling on a private loan the rate the parties write down is the rate that governs.
- 2
Maine imposes no general usury cap on a private written loan. The parties may agree in writing to the interest rate. Maine caps only a supervised loan, a consumer loan whose finance charge exceeds 12 and one quarter percent per year made by a lender regularly in the business (Title 9-A), which does not reach an occasional private lender.
- 3
The only fixed legal rate is 6 percent per year, and it applies to a loan made by a financial institution when no written agreement sets a different rate (Title 9-B Section 432). A private lender is not a financial institution, so for a private loan there is no statutory default rate; state the rate in the written agreement.
- 4
You do not need a license to make an occasional private loan. A supervised-lender license is required only of a person engaged in the business of making loans, which Maine measures as more than 25 loans a year (Title 9-A Section 2-301), overseen by the Bureau of Consumer Credit Protection.
- 5
Maine sets no separate flat late-fee cap for a private loan. Its consumer-credit delinquency limits apply only to regulated creditors, not to a one-off private loan. Set any late charge as a reasonable estimate of the lender actual costs from a late payment.
- 6
Put the loan in writing and keep it. Because Maine sets no fixed rate cap on a private loan, the written agreement is what fixes the rate and terms, and a civil action on the debt must generally be filed within six years (Title 14 Section 752). A signed agreement is far easier to enforce.
- 7
Spell out default and acceleration. Define what counts as default, usually a missed payment past a stated grace period, and include an acceleration clause so the lender can demand the entire unpaid balance at once if the borrower defaults.
Key decisions before you file
Before you file a Loan Agreement in Maine, a few decisions shape the document: which option to choose and what each one means. The Loan Agreement guide walks through them.
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Maine Requirements for Loan Agreement
Maximum Interest Rate (No General Cap)
Maine imposes no general usury ceiling on a private written loan, so the parties may agree in writing to the rate. Maine caps only a supervised loan, a consumer loan whose finance charge exceeds 12 and one quarter percent per year made by a lender regularly in the business (Title 9-A), which does not reach an occasional private lender. Because there is no fixed cap, always state the rate as a number in the agreement.
Legal Rate When the Contract Is Silent
The only fixed statutory rate is 6 percent per year, and it applies to a loan made by a financial institution when there is no written agreement setting a different rate (Title 9-B Section 432). A private individual is not a financial institution, so for a private loan there is no statutory silent rate. State the agreed rate in writing so there is no gap; on a judgment, post-judgment interest is set under Title 14 Section 1602-C.
Lender Licensing (Consumer Credit Code)
A supervised-lender license under the Maine Consumer Credit Code, overseen by the Bureau of Consumer Credit Protection, is required only of a person engaged in the business of making loans (Title 9-A Section 2-301). Maine measures being in the business as more than 25 loans a year, so an individual making an occasional private loan is not in the business of lending and generally does not need a license.
Rate Caps Apply Only to Supervised Loans
Maine reserves its interest-rate limits for a supervised loan, a consumer loan whose finance charge exceeds 12 and one quarter percent per year made by a lender regularly in the business (Title 9-A). A licensed consumer lender is bound by those Consumer Credit Code limits, but a genuine one-off private written loan is outside that regime and is not subject to a general rate ceiling. This is the differentiating Maine fact.
Late Fees on a Private Loan
Maine sets no separate flat statutory late-fee cap for a private loan, and its consumer-credit delinquency limits apply only to regulated creditors, not to a one-off private loan. Set any late charge as a reasonable estimate of the lender actual costs from a late payment, not an arbitrary penalty, and state the late fee and any grace period clearly in the agreement.
Put the Loan in Writing
A loan need not be written to be enforceable in Maine, but writing it down is strongly advised, and because Maine sets no fixed rate cap on a private loan, the written agreement is what fixes the rate and terms. A written contract also carries a six-year period to sue (Title 14 Section 752). Have both parties sign and date the agreement and keep a copy.
Default and Acceleration
Define default clearly, usually a payment missed past a stated grace period, a broken promise in the agreement, or the borrower insolvency. Include an acceleration clause so that on default the lender may declare the entire unpaid balance of principal and accrued interest immediately due. Stating any required notice and cure period avoids disputes about whether acceleration was proper.
Time Limit to Sue on the Debt
A lawsuit to collect on a written loan agreement must generally be filed within six years in Maine, because a civil action must be commenced within six years after the cause of action accrues (Title 14 Section 752). The clock runs from the default. Keeping a signed written agreement and a record of payments gives you a clear, provable claim within that period.