Wisconsin Loan Agreement
A Wisconsin loan agreement sets the loan terms and caps interest on a private loan under 150,000 dollars near 12 percent per year, with a 5 percent silent rate.
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Introduction
A loan agreement is the written record of money lent and the borrower's promise to repay it with interest on a set schedule, and Wisconsin caps a private loan under 150,000 dollars at the equivalent of 12 percent a year. In Wisconsin the interest a private lender can charge is capped, but the cap has broad exceptions. Under Wis. Stat. Section 138.05, a private loan of less than 150,000 dollars is held to the equivalent of 12 percent per year, yet that cap does not apply to loans of 150,000 dollars or more, loans to corporations or limited liability companies, consumer credit transactions under the Wisconsin Consumer Act, or loans by licensed lenders. If a rate is not clearly expressed in writing, the legal rate is 5 percent per year (Wis. Stat. Section 138.04). Making an occasional private loan does not require a license: a lender license is required only to be in the business of making loans above the Section 138.05 rate, including consumer loans over 18 percent (Wis. Stat. Section 138.09), which a one-off personal loan is not. Once the rate is set, a sound Wisconsin 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 lawsuit on a contract can be brought for six years in Wisconsin (Wis. Stat. Section 893.43), and a clear signed agreement is what protects both sides if the loan is later disputed. DocDraft builds your Wisconsin loan agreement from your facts, with attorney review available before you sign.
Key Things to Know
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A loan agreement documents the money lent, the interest, the payment dates, and the remedy on default. For a private Wisconsin loan under 150,000 dollars, the interest it records should stay at or below the equivalent of 12 percent a year.
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Wisconsin caps a private loan under 150,000 dollars at the equivalent of 12 percent per year (Wis. Stat. Section 138.05). The cap does not apply to loans of 150,000 dollars or more, loans to corporations or limited liability companies, consumer transactions under the Wisconsin Consumer Act, or licensed lenders, so a private personal loan should stay at or below 12 percent.
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If a rate is not clearly expressed in writing, Wisconsin sets the legal rate at 5 percent per year (Wis. Stat. Section 138.04). To charge a different rate, up to the Section 138.05 cap on a private loan, state the agreed rate in writing.
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You do not need a license to make an occasional private loan. Wisconsin requires a lender license only to be in the business of making loans above the Section 138.05 rate, including consumer loans with a finance charge over 18 percent (Wis. Stat. Section 138.09). A one-off personal loan at or below the cap is not that business.
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The cap has broad exceptions. Because loans to companies, loans of 150,000 dollars or more, and licensed-lender loans fall outside Section 138.05, the 12 percent figure is the practical ceiling for a plain private personal loan under 150,000 dollars. Confirm which rule applies before setting a rate.
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A late fee should be reasonable. Wisconsin sets no flat statutory late-fee cap for a private loan, so tie any late charge to your real costs from a late payment; an amount that operates as an unreasonable penalty may not be enforced.
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Put the loan in writing and spell out default and acceleration. Define default as a payment missed 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. A lawsuit on a contract can be brought for six years (Wis. Stat. Section 893.43).
Key decisions before you file
Before you file a Loan Agreement in Wisconsin, 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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Wisconsin Requirements for Loan Agreement
Maximum Interest Rate (Usury Cap)
Wisconsin caps a private loan under 150,000 dollars at the equivalent of 12 percent per year (Wis. Stat. Section 138.05). State the rate as a number and keep a private personal loan at or below 12 percent. The cap does not apply to loans of 150,000 dollars or more, loans to corporations or limited liability companies, consumer credit transactions under the Wisconsin Consumer Act, or licensed lenders, which follow separate rules.
Legal Rate When the Contract Is Silent
If a rate is not clearly expressed in writing, Wisconsin applies the legal rate of 5 percent per year (Wis. Stat. Section 138.04). This default only fills a gap when the parties did not fix a rate in writing. To charge a different rate, up to the Section 138.05 cap on a private loan under 150,000 dollars, state the agreed rate in the agreement so the 5 percent default does not apply by accident.
Lender Licensing (Licensed Lender)
Wisconsin requires a lender license only to be in the business of making loans and charging more than Section 138.05 allows, including making consumer loans with a finance charge over 18 percent per year (Wis. Stat. Section 138.09). An individual who makes an occasional personal loan at or below the cap is not in that business and generally does not need a license. Confirm your status with the Department of Financial Institutions before lending as a business.
The Cap Has Broad Exceptions
The Section 138.05 cap does not reach many loans: loans of 150,000 dollars or more, loans to corporations or limited liability companies, consumer credit transactions under the Wisconsin Consumer Act, and licensed-lender loans all fall outside it. For a plain private personal loan under 150,000 dollars, the equivalent of 12 percent per year is the practical ceiling. Confirm which rule applies before you set a rate.
Late Fees Should Be Reasonable
Wisconsin sets no flat statutory late-fee cap for a private one-off loan, so a late charge is judged under general contract law. Set any late fee as a reasonable estimate of the lender's actual costs from a late payment rather than an arbitrary penalty, because an amount that operates as a penalty may not be enforced. 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 Wisconsin, but writing it down is strongly advised. A rate other than the 5 percent legal rate must be clearly expressed in writing (Wis. Stat. Section 138.04), and a private loan under 150,000 dollars must stay at or below the Section 138.05 cap. A written contract also carries a six-year period to sue. 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 loan agreement must generally be commenced within six years after the cause of action accrues in Wisconsin (Wis. Stat. Section 893.43). Keeping a signed written agreement makes the debt and its terms easy to prove, so a written loan gives you the clear, easier-to-prove period if you have to collect.