Mississippi Loan Agreement
A Mississippi loan agreement sets the loan terms. The legal rate is 8 percent, and an ordinary written loan may reach 10 percent or 5 percent over the discount rate.
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Introduction
Put simply, a Mississippi loan agreement is a written contract recording the money advanced, the terms for paying it back, and the interest that accrues, which on an ordinary written loan may not exceed the greater of 10 percent per year or 5 percent above the Federal Reserve discount rate. In Mississippi the interest you can charge is limited. As reported in the Mississippi Code Section 75-17-1, the legal rate that applies when no rate is agreed in writing is 8 percent per year, and for an ordinary written loan the ceiling is the greater of 10 percent per year or 5 percent above the Federal Reserve discount rate. Because interest statutes are amended often, confirm the current figure against the Mississippi Code before you rely on it. Larger loans and loans to a business may carry higher agreed rates. Making an occasional private loan does not by itself require a license: Mississippi requires a license to engage in the business of lending money (Section 75-67-105) and treats a person who makes no more than one loan a month, or twelve in a year, as an occasional lender rather than one in the business (Section 75-67-103). Once the rate is set, a sound Mississippi 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, and keep the signed agreement, because Mississippi generally requires a suit on the debt within three years. DocDraft builds your Mississippi loan agreement from your facts, with attorney review available before you sign.
Key Things to Know
- 1
At its core the agreement writes down a loan, covering the amount, the repayment dates, the rate, and what happens on default, and Mississippi limits the rate to the greater of 10 percent per year or 5 percent above the Federal Reserve discount rate.
- 2
Mississippi limits interest on an ordinary written loan. As reported in the Mississippi Code Section 75-17-1, the ceiling is the greater of 10 percent per year or 5 percent above the Federal Reserve discount rate, set by written agreement. Because interest statutes change, confirm the current figure against the Mississippi Code before you rely on it.
- 3
If a loan does not state a rate, Mississippi applies a legal rate of 8 percent per year on notes, accounts, and contracts (Mississippi Code Section 75-17-1). To charge more than 8 percent you generally need a written agreement that sets the rate. Verify the current legal rate before you draft.
- 4
You do not usually need a license for an occasional private loan. Mississippi requires a license to engage in the business of lending money (Mississippi Code Section 75-67-105) and defines an occasional lender as a person making no more than one loan in a month or twelve in a twelve-month period (Section 75-67-103). Someone lending more often may be in the business and need a license.
- 5
Larger and business loans may carry higher agreed rates. Mississippi law reportedly allows higher written rates on loans to a business entity and on larger loans, so the 10 percent ceiling may not be the limit for every loan (Mississippi Code Section 75-17-1). Confirm which rate applies to your loan before charging above 10 percent.
- 6
Charging too much is costly in Mississippi. Charging more than the lawful maximum forfeits the interest and finance charges, and a charge that exceeds the maximum by more than 100 percent can forfeit the principal as well (Mississippi Code Section 75-17-25). Keeping the rate conservative and confirmed protects the lender.
- 7
Spell out default and acceleration, and keep the signed agreement. Define what counts as default, include an acceleration clause so the lender can demand the full unpaid balance at once, and remember that Mississippi generally requires a suit on the debt within three years (Mississippi Code Section 15-1-49).
Key decisions before you file
Before you file a Loan Agreement in Mississippi, 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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Mississippi Requirements for Loan Agreement
As reported in the Mississippi Code Section 75-17-1, an ordinary written loan may charge up to the greater of 10 percent per year or 5 percent above the Federal Reserve discount rate, set by written agreement. Because interest statutes are amended often, confirm the current maximum against the primary Mississippi Code before charging interest above the 8 percent legal rate, and state the rate as a clear number.
If a loan does not state an interest rate, Mississippi applies a legal rate of 8 percent per year on notes, accounts, and contracts (Mississippi Code Section 75-17-1). To charge more than 8 percent you generally need a written agreement that sets the rate. Write the agreed rate into the agreement so the 8 percent default does not apply by accident, and confirm the current legal rate before you draft.
Mississippi requires a license to engage in the business of lending money (Mississippi Code Section 75-67-105) and defines an occasional lender as a person making no more than one loan a month or twelve in a twelve-month period (Section 75-67-103). An individual making an isolated private loan is generally treated as an occasional lender, not in the business. If you lend more frequently, confirm whether you need a license from the Department of Banking and Consumer Finance.
The 10 percent ceiling may not apply to every loan. Mississippi law reportedly allows higher written rates on loans to a business entity and on larger loans (Mississippi Code Section 75-17-1), so a business or large loan may carry a higher agreed rate than an ordinary personal loan. Confirm which threshold and rate apply to your specific loan against the primary Mississippi Code before charging above 10 percent.
Mississippi's usury penalties are severe. As reported in Mississippi Code Section 75-17-25, charging more than the lawful maximum forfeits all interest and finance charges, and a charge that exceeds the maximum by more than 100 percent forfeits the principal and finance charges, with amounts paid recoverable by suit. Keep the rate conservative and confirm the current maximum before you lend.
A loan need not be written to be enforceable in Mississippi, but writing it down is strongly advised. To charge interest above the 8 percent legal rate you generally need a written agreement that sets the rate (Mississippi Code Section 75-17-1), and a written, signed agreement records the schedule and remedies and proves the debt. Have both parties sign and date the agreement and keep a copy.
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.
Mississippi generally applies a three-year limitation period to actions for which no other period is set, which covers a suit to collect on a written loan (Mississippi Code Section 15-1-49), usually running from the default or the last payment. Mississippi does not give written contracts a longer period than this general rule, so keep a signed agreement and act promptly. Confirm the current period and any exceptions before you rely on it.
Frequently Asked Questions
A loan agreement is a written contract in which a lender lends money to a borrower who promises to repay it, usually with interest, on an agreed schedule. In Mississippi it should name the parties, the principal, the interest rate as a number, the repayment dates, any late fee, and what counts as default. Because Mississippi applies an 8 percent legal rate when no rate is agreed and caps an ordinary written loan (Mississippi Code Section 75-17-1), stating the rate in writing matters. Confirm the current figures against the Mississippi Code before relying on them.
For an ordinary written loan, Mississippi Code Section 75-17-1 reportedly sets the ceiling at the greater of 10 percent per year or 5 percent above the Federal Reserve discount rate, agreed in writing. Loans to a business entity and larger loans may carry higher agreed rates. Because interest statutes are amended often, treat these figures as a starting point and confirm the current rate against the Mississippi Code before you charge interest above 8 percent.
A loan does not have to be in writing to be enforceable in Mississippi, but writing it down is strongly advised. To charge interest above the 8 percent legal rate you generally need a written agreement that sets the rate (Mississippi Code Section 75-17-1). A written, signed agreement also records the schedule and remedies and helps you prove the debt if you have to sue within the general three-year limitation period. Confirm the current rules before you rely on them.
Not usually for an occasional private loan. Mississippi requires a license to engage in the business of lending money (Mississippi Code Section 75-67-105) and defines an occasional lender as a person making no more than one loan a month, or twelve in a twelve-month period (Section 75-67-103). An individual making an isolated private loan is generally treated as an occasional lender, not in the business. If you lend more frequently, you may need a license from the Department of Banking and Consumer Finance.
Charging more than the lawful maximum is usurious in Mississippi. As reported in Mississippi Code Section 75-17-25, charging over the maximum forfeits all interest and finance charges, and a charge that exceeds the maximum by more than 100 percent forfeits the principal and finance charges, with amounts paid recoverable by suit. Because the penalties are severe, keep the rate conservative and confirm the current maximum against the Mississippi Code before you lend.
If a loan does not state a rate, Mississippi applies a legal rate of 8 percent per year on notes, accounts, and contracts (Mississippi Code Section 75-17-1). To charge a higher rate you generally need a written agreement that fixes the rate. Always write the agreed rate into the agreement so the 8 percent default does not apply by accident, and confirm the current legal rate against the Mississippi Code before you draft.
Yes, if it is reasonable. Mississippi does not set a general statutory late-fee cap for a plain private written loan, so a late fee is enforced as a matter of contract. Tie any late fee to your real costs from a late payment rather than an arbitrary penalty, and state it clearly in the agreement. Licensed small-loan and consumer-finance lenders face separate limits that do not apply to a private one-off loan.
Mississippi generally applies a three-year limitation period to actions for which no other period is set, which covers a suit to collect on a written loan (Mississippi Code Section 15-1-49), usually running from the default or the last payment. Mississippi does not give written contracts a longer period than this general rule, so keep a signed agreement and act promptly. Confirm the current period and any exceptions before you rely on it.