Idaho Promissory Note
Idaho promissory note template: no statutory cap on written-contract interest, 12% default rate, 5-year SOL. Free template. Attorney review available.
Introduction
In 2024, Idaho lawmakers considered a bill to cap the interest rate on a written loan contract at 30% per year, or 10 points over the prime rate. It never made it into the Idaho Code. As things stand, Idaho places no statutory ceiling at all on the rate a maker and payee can fix in a written promissory note, whether the loan is between family, friends, or a small business, and the same rate-by-agreement rule applies even to a licensed lender's regulated consumer loans. The only number Idaho Code sets is a fallback: if a note doesn't state a rate in writing, interest defaults to 12% per year (Idaho Code Section 28-22-104). A promissory note itself is a written, signed promise by one party, the maker, to pay a definite sum of money to another party, the payee, either on demand or by a set date, and it's what turns that agreement into a debt the payee can actually enforce. An Idaho note doesn't need to be notarized or witnessed to be enforceable. Idaho's own negotiable-instruments statute is unusually direct about confession-of-judgment clauses: it lists a power to confess judgment as a type of clause a note can validly include, though such a clause is void if the loan is for a personal, family, or household purpose. You generally have 5 years from a missed payment or the note's due date to sue to collect on a written note.
Key Things to Know
- 1
A promissory note is a written, signed promise by one party (the maker) to pay a definite sum of money to another party (the payee), either on demand or by a set date.
- 2
Idaho sets no statutory cap on the interest rate the maker and payee can fix in a written contract; the parties may agree to any rate. If a note doesn't state a rate, interest defaults to 12% per year (Idaho Code Section 28-22-104). The Idaho Credit Code's own maximum finance charge for a licensed lender's regulated consumer loans is likewise "that which is agreed upon between the parties" (Idaho Code Section 28-42-201), so there's no separate lower ceiling for a licensed loan either. A 2024 bill to add a 30%-or-10-over-prime cap did not become law.
- 3
An Idaho promissory note does not need to be notarized or witnessed to be enforceable. Idaho Code Section 28-3-104 lists what makes a note a valid negotiable instrument (an unconditional promise, a fixed amount, a signature, payable on demand or by a definite date), and notarization isn't one of the requirements.
- 4
Idaho Code Section 28-3-104 expressly permits a note to include "an authorization or power to the holder to confess judgment" (letting the payee obtain a court judgment without a full lawsuit) without losing its status as a valid negotiable instrument. That authorization is void, however, if the note is for a personal, family, or household purpose, since Idaho Code Section 28-43-305 bans confession of judgment in a "regulated consumer credit transaction."
- 5
You generally have 5 years from a missed payment or the note's stated due date to sue to collect on a written promissory note in Idaho. (Idaho Code Section 5-216)
- 6
If an Idaho promissory note is secured by personal property rather than real property, the lender generally needs to file a UCC-1 financing statement with the Idaho Secretary of State to protect its priority against other creditors. (Idaho Code Section 28-9-310)
- 7
Promissory notes are commonly used in Idaho for family loans, business loans, and loans between friends. An isolated private loan generally doesn't trigger Idaho Credit Code licensing, which attaches to a person who advertises, offers, or solicits to make a loan for a consumer purpose (Idaho Code Section 28-41-201).
Key decisions before you file
Before you file a Promissory Note in Idaho, a few decisions shape the document: which option to choose and what each one means. The Promissory Note guide walks through them.
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Idaho Requirements for Promissory Note
Idaho does not require a promissory note to be notarized or witnessed to be enforceable. Idaho Code Section 28-3-104's list of what makes a note a valid negotiable instrument does not include notarization or witnessing; notarization is optional and used only for evidentiary purposes.
Idaho sets no statutory cap on the interest rate the parties may fix in a written contract; if the contract does not state a rate, interest defaults to 12% per annum.
The Idaho Credit Code sets the maximum finance charge for a licensed lender's regulated consumer loans as the rate agreed upon between the parties, with no separate statutory ceiling.
To be a valid negotiable instrument, a note must be an unconditional promise to pay a fixed amount, signed by the maker, and payable on demand or at a definite time.
Generally 5 years from a missed payment or the note's stated due date to sue to collect on a written promissory note.
If a note is secured by personal property, the lender generally must file a UCC-1 financing statement with the Idaho Secretary of State to perfect and prioritize its security interest.
Idaho's negotiable-instruments statute permits a note to include a power to confess judgment without losing negotiability, but that authorization is void if the note is for a personal, family, or household purpose (a "regulated consumer credit transaction").
Idaho Credit Code licensing attaches to a person who advertises, offers, or solicits to make a loan for a consumer purpose; an isolated private person-to-person promissory note does not trigger these requirements.
Frequently Asked Questions
Idaho sets no statutory cap on the interest rate the maker and payee can fix in a written contract; the parties may agree to any rate. If a note doesn't state a rate, interest defaults to 12% per year (Idaho Code Section 28-22-104). Even a licensed lender's regulated consumer loans have no separate statutory ceiling; the Idaho Credit Code sets the maximum finance charge as whatever rate the parties agree to.
No. Idaho Code Section 28-3-104 lists what makes a note a valid, enforceable negotiable instrument, and notarization isn't one of the requirements. Notarizing a note is optional and can help as evidence of who signed it, but it doesn't affect enforceability.
Include the principal amount, the interest rate (any rate is enforceable once it's set out in writing, or 12% by default if the note is silent), the repayment schedule, what counts as default, and the signatures of the maker and payee. Idaho's own negotiable-instruments statute allows a confession-of-judgment clause in principle, but it's void for a personal, family, or household loan and Idaho doesn't spell out a clear procedure to enforce one otherwise, so it's safest to leave one out and rely on a regular lawsuit if the maker defaults.
Yes, as long as it meets the basic requirements of a valid contract and, if it's meant to be a negotiable instrument, the elements in Idaho Code Section 28-3-104: an unconditional promise to pay a fixed amount, a signature, and payment on demand or by a definite date. It doesn't need to be notarized to be enforceable.
An unsecured note relies only on the maker's promise to pay. A secured note is backed by collateral, and if it's secured by personal property rather than real estate, the lender generally needs to file a UCC-1 financing statement with the Idaho Secretary of State to protect its priority against other creditors.
The payee can declare the remaining balance immediately due (if the note includes an acceleration clause) and can sue to collect. Idaho's negotiable-instruments statute doesn't ban a confession-of-judgment clause outright the way some states do, but such a clause is void for a personal, family, or household loan, and Idaho doesn't lay out a clear court procedure for enforcing one in other situations, so a regular lawsuit is generally how a payee collects.
Generally 5 years from a missed payment or the note's stated due date, under Idaho's statute of limitations for an action on a written contract (Idaho Code Section 5-216). Waiting too long can mean losing the right to sue on the note.
Yes. Promissory notes are commonly used for both family loans and business or LLC loans in Idaho. The same rate-by-agreement rule and 12% default rate apply either way. An isolated private loan generally doesn't trigger Idaho Credit Code licensing, which attaches to a person who advertises, offers, or solicits to make loans for a consumer purpose, not to a one-off loan between family members or into an LLC.