New Jersey Promissory Note
New Jersey promissory note template within the 16% written-contract usury cap and 6-year statute of limitations. Free template. Attorney review available.
Introduction
New Jersey's confession-of-judgment rule runs backward from what a borrower might expect: a 2020 reform protects business borrowers, not personal ones. Under New Jersey Statutes Annotated Section 2A:16-9.1, no business financing contract, the kind used by merchant cash advance lenders, may include a judgment-by-confession clause; one that does is invalid and unenforceable. On an ordinary personal or family note, a confession of judgment is still technically available, but only through Court Rule 4:45's judge-supervised motion, never an automatic entry. A promissory note is a written, signed promise by one party, the maker, to pay a definite sum to another, the payee, on demand or by a set date; the template below turns New Jersey's rate rules into an actual fillable note. New Jersey also runs two usury ceilings at once. Without a written rate agreement, the legal rate is 6% per year; with one, a lender can charge up to 16% per year, and a loan of $50,000 or more, other than a home-secured loan, is exempt from the civil cap entirely. Charging more than 30% per year, or more than 50% to a corporation, LLC, or LLP, is criminal usury, a felony. A New Jersey note doesn't need to be notarized or witnessed to be enforceable, and you generally have 6 years from a missed payment or the note's due date to sue to collect.
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
Without a written rate agreement, New Jersey's legal interest rate is 6% per year; with a written contract specifying a rate, a lender may charge up to 16% per year. A loan of $50,000 or more, other than one secured by a first lien on a one-to-six-unit residential property, is exempt from this civil usury cap entirely, and a corporation, LLC, or LLP borrower cannot raise a usury defense at all. (N.J.S.A. 31:1-1, 31:1-6)
- 3
Separate from the civil cap, charging more than 30% per year on a loan to an individual, or more than 50% per year on a loan to a corporation, LLC, or LLP, is criminal usury, a felony: a crime of the second degree above 50%, and a crime of the third degree between 30% and 50% on a loan over $1,000. (N.J.S.A. 2C:21-19)
- 4
A New Jersey promissory note does not need to be notarized or witnessed to be enforceable. New Jersey Statutes Annotated Section 12A: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.
- 5
Confession-of-judgment clauses are banned outright in a business financing contract, the kind used by merchant cash advance and similar commercial lenders, since 2020; a clause in a business financing agreement is invalid and unenforceable. On an ordinary personal note, a confession of judgment is still technically available under Court Rule 4:45, but only through a judge-supervised motion with notice to the maker and a sworn affidavit, not an automatic entry. (N.J.S.A. 2A:16-9.1, 2A:16-9.2; N.J. Ct. R. 4:45)
- 6
You generally have 6 years from a missed payment or the note's stated due date to sue to collect on a written promissory note in New Jersey. (N.J.S.A. 2A:14-1)
- 7
If a New Jersey promissory note is secured by personal property rather than real property, the lender generally needs to file a UCC-1 financing statement, typically with the New Jersey Division of Revenue and Enterprise Services, to protect its priority against other creditors. (N.J.S.A. 12A:9-501)
Key decisions before you file
Before you file a Promissory Note in New Jersey, 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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New Jersey Requirements for Promissory Note
Without a written rate agreement, the legal rate is 6% per annum; with a written contract specifying a rate, up to 16% per annum. A loan of $50,000 or more, other than one secured by a first lien on a one-to-six-unit residential property, is exempt from this civil usury cap entirely.
A corporation, limited liability company, or limited liability partnership cannot raise the defense of civil usury in an action to enforce a note it executed, and its separate criminal usury ceiling is 50% per annum rather than the 30% per annum ceiling that applies to an individual borrower.
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 6 years from a missed payment or the note's stated due date to sue to collect on a written promissory note.
A consumer lender license is required to engage in the business of making loans of $50,000 or less used primarily for personal, family, or household purposes and payable in installments; the requirement is keyed to being in that business, not to a single private loan between individuals.
A confession-of-judgment clause is banned outright and unenforceable in a business financing contract, such as a merchant cash advance agreement, under New Jersey Statutes Annotated Section 2A:16-9.1. On an ordinary personal note, a confession of judgment remains legally possible only through Rule 4:45's court-supervised motion procedure, requiring notice to the maker and a sworn affidavit, not an automatic entry.
If a note is secured by personal property, the lender generally must file a UCC-1 financing statement, typically with the New Jersey Division of Revenue and Enterprise Services, to perfect and prioritize its security interest against other creditors.
New Jersey does not require a promissory note to be notarized or witnessed to be enforceable; Section 12A:3-104's list of what makes a note a valid negotiable instrument does not include notarization or witnessing.
Frequently Asked Questions
Without a written rate agreement, New Jersey's legal interest rate is 6% per year. With a written contract specifying a rate, a lender may charge up to 16% per year, and a loan of $50,000 or more, other than one secured by a first lien on a home, is exempt from that civil cap entirely. Separately, charging more than 30% per year on a loan to an individual, or more than 50% per year on a loan to a corporation, LLC, or LLP, is criminal usury, a felony.
No. New Jersey Statutes Annotated Section 12A: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, an interest rate within New Jersey's usury limits, the repayment schedule, what counts as default, and the signatures of the maker and payee. If this note is a business financing contract, leave out any confession-of-judgment clause, since one is banned outright; on an ordinary personal note, a confession of judgment is still legally possible but only through a court-supervised motion, not an automatic entry.
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 New Jersey Statutes Annotated Section 12A: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, typically with the New Jersey Division of Revenue and Enterprise Services, 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. A confession-of-judgment clause is banned outright if the note is a business financing contract, so the payee cannot get a judgment that way; on an ordinary personal note, a confession of judgment still requires a court-supervised motion with notice and a sworn affidavit, not an automatic entry.
Generally 6 years from a missed payment or the note's stated due date, under New Jersey's statute of limitations for a contract action (N.J.S.A. 2A:14-1). 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 New Jersey. A corporation, LLC, or LLP borrower cannot raise a usury defense at all, and its criminal usury ceiling is higher (50% instead of 30%), so the applicable interest-rate limits genuinely differ depending on whether the maker is an individual or a business entity.