Oklahoma Loan Agreement
An Oklahoma loan agreement sets the loan terms; the constitution treats a private contract rate above 10 percent per year as usurious.
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Introduction
A loan agreement in Oklahoma is the written contract that binds a lender's advance to a borrower's promise to repay with interest, a rate the state constitution treats as usurious once it climbs above 10 percent per year for a private lender. In Oklahoma the interest a private lender can charge is limited by the state constitution. Article 14, Section 2 of the Oklahoma Constitution provides that, absent legislation fixing a higher maximum, a contract for a rate greater than 10 percent per year is usurious, and where no rate is agreed the rate may not exceed 6 percent per year. The state statute agrees: 15 O.S. Section 266 sets the legal rate at 6 percent absent an agreed rate and lets the parties agree to any rate authorized by law. The Uniform Consumer Credit Code authorizes licensed supervised lenders to charge more than 10 percent on consumer loans, so a private lender who is not a licensed supervised lender should keep a loan at or below 10 percent. Making an occasional private loan does not by itself require a license: Title 14A requires a license only of a person engaged in the business of making supervised loans (consumer loans over 10 percent per year). Once the rate is set, a sound Oklahoma 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 written contract can be enforced for five years (12 O.S. Section 95), and a clear signed agreement is what protects both sides if the loan is later disputed. DocDraft builds your Oklahoma loan agreement from your facts, with attorney review available before you sign.
Key Things to Know
- 1
At its core, a loan agreement documents an Oklahoma loan's amount, its repayment schedule, and its interest rate, which a private lender should keep at or below the constitutional limit of 10 percent per year.
- 2
Oklahoma's constitution caps a private contract rate at 10 percent per year. Under Article 14, Section 2, absent legislation fixing a higher maximum, a contract for a greater rate than 10 percent per year is usurious. A private lender who is not a licensed supervised lender should keep a loan at or below 10 percent.
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If no rate is agreed, the legal rate is 6 percent per year (Oklahoma Constitution Article 14, Section 2; 15 O.S. Section 266). To charge more than 6 percent, up to the 10 percent ceiling, state the agreed rate in a written agreement.
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Licensed lenders may charge more. The Uniform Consumer Credit Code (Title 14A) authorizes licensed supervised lenders to charge more than 10 percent on consumer loans, which is why a licensed lender can lawfully exceed the constitutional ceiling while a private individual cannot.
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You do not need a license to make an occasional private loan. Title 14A requires a license only of a person engaged in the business of making supervised loans (consumer loans with a finance charge over 10 percent per year); a consumer loan is one made by a person regularly engaged in the business of lending, so a one-off private loan is outside the requirement.
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Put the loan in writing and keep it. A lawsuit on a written contract must generally be filed within five years in Oklahoma (12 O.S. Section 95). A written, signed agreement is required to set an agreed rate above 6 percent and 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 Oklahoma, 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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Oklahoma Requirements for Loan Agreement
Oklahoma's constitution caps a private contract rate at 10 percent per year. Under Article 14, Section 2, absent legislation fixing a higher maximum, a contract for a greater rate than 10 percent per year is usurious. A private lender who is not a licensed supervised lender should keep a loan at or below 10 percent, and state the rate as a number in the agreement.
If no rate is agreed, Oklahoma applies the legal rate of 6 percent per year (Oklahoma Constitution Article 14, Section 2; 15 O.S. Section 266). To charge more, up to the 10 percent ceiling for a private loan, the parties must state the agreed rate in a written agreement. Always write the agreed rate into the agreement so the 6 percent default does not apply by accident.
The 10 percent constitutional ceiling binds private lenders, not licensed supervised lenders. Under the Uniform Consumer Credit Code (Title 14A), a licensed supervised lender may charge more than 10 percent on consumer loans. This is why a licensed lender can lawfully exceed the ceiling while a private individual cannot. Confirm your status before setting a rate above 10 percent.
Oklahoma's Uniform Consumer Credit Code (Title 14A) requires a license, from the Department of Consumer Credit, only of a person engaged in the business of making supervised loans, meaning consumer loans with a finance charge over 10 percent per year. A consumer loan is one made by a person regularly engaged in the business of lending, so an individual making an occasional private loan generally does not need a license. A repeat lender should confirm licensing.
Charging a knowingly usurious rate in Oklahoma forfeits the entire interest on the loan, and a borrower who paid it may recover twice the interest paid if suit is brought within two years (Oklahoma Constitution Article 14, Section 3). Keep a private loan at or below 10 percent per year unless you are a licensed supervised lender, and state the agreed rate in the written agreement so you can show the loan was within the lawful limit.
Oklahoma does not set a flat statutory late-fee cap on a private written loan, though the Uniform Consumer Credit Code sets specific limits for licensed consumer loans. A late charge on a private loan should be a reasonable estimate of the lender actual costs from a late payment, not a penalty. State the grace period and the fee clearly in the Oklahoma loan agreement.
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.
A lawsuit to collect on a written loan agreement must generally be filed within five years in Oklahoma, running from the default or from the last payment or written acknowledgment of the debt (12 O.S. Section 95). Keeping a signed, dated written agreement gives the longer, easier-to-prove period if you have to collect.
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 Oklahoma 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 Oklahoma's constitution treats a private contract rate above 10 percent per year as usurious (Article 14, Section 2) and fills a blank rate at 6 percent, stating the rate in writing matters. A written contract can be enforced for five years.
For a private lender the ceiling is generally 10 percent per year. Oklahoma Constitution Article 14, Section 2 provides that, absent legislation fixing a higher maximum, a contract for more than 10 percent per year is usurious, and where no rate is agreed the rate may not exceed 6 percent. Licensed supervised lenders under the Uniform Consumer Credit Code may charge more, but a private lender who is not licensed should keep a loan at or below 10 percent.
A loan does not have to be in writing to be enforceable in Oklahoma, but writing it down is strongly advised. A written agreement is required to set an agreed rate above the 6 percent default, up to the 10 percent ceiling (15 O.S. Section 266). A written contract also carries a five-year limitations period to sue (12 O.S. Section 95), so a signed agreement protects both sides if the loan is later disputed.
Not for a one-off private loan. Oklahoma's Uniform Consumer Credit Code (Title 14A) requires a license, from the Department of Consumer Credit, only of a person engaged in the business of making supervised loans, meaning consumer loans with a finance charge over 10 percent per year. A consumer loan is one made by a person regularly engaged in the business of lending, so an individual making an occasional personal loan generally does not need a license. A repeat lender should confirm licensing.
Charging more than the lawful rate is usurious. Under Oklahoma Constitution Article 14, Section 3, a knowing usurious charge forfeits the entire interest, and a borrower who paid it may recover twice the interest paid (if suit is brought within two years). The safest course is to keep a private loan at or below 10 percent per year (Article 14, Section 2) unless you are a licensed supervised lender, and to state the agreed rate in the written Oklahoma loan agreement.
If no rate is agreed, Oklahoma applies the legal rate of 6 percent per year (Oklahoma Constitution Article 14, Section 2; 15 O.S. Section 266). To charge a higher rate, up to the 10 percent ceiling for a private loan, you must state the agreed rate in a written agreement. Always write the agreed rate into the Oklahoma loan agreement so the 6 percent default does not apply by accident.
Yes, if the fee is reasonable. Oklahoma does not set a flat statutory late-fee cap on a private written loan, though the Uniform Consumer Credit Code sets specific limits for licensed consumer loans. Tie any late fee in an Oklahoma loan agreement to the real cost of a late payment rather than an arbitrary penalty, and state the grace period and the fee clearly in the contract.
For a written loan agreement you generally have five years from the default (or from the last payment or written acknowledgment of the debt) to sue in Oklahoma (12 O.S. Section 95). Because the period runs from breach and a signed writing is easy to prove, keeping a written, dated Oklahoma loan agreement gives you the stronger position if you have to collect.