South Carolina Promissory Note
South Carolina promissory note template: no cap on a written note's interest rate, 8.75% default rate, 3-year SOL. Free template. Attorney review available.
Introduction
South Carolina's usury statute caps interest at 6% per year and un-caps it in the very same sentence. Section 37-10-106 sets that 6% ceiling, then immediately excuses any written contract with an express rate agreement, letting the maker and payee agree to any rate they want once the note is signed. If a written note doesn't state a rate at all, the fallback is 8.75% per year, the default legal rate under Section 34-31-20. That written-contract escape hatch closes back up, though, if the lender is regularly engaged in the business of making loans to a consumer: a Consumer Protection Code loan for personal, family, or household use, $25,000 or less, tops out at 12% per year for an ordinary lender or 18% per year, or a rate filed with the Department of Consumer Affairs, for a supervised lender. A promissory note is a written, signed promise by one party, the maker, to pay a definite sum of money to another, the payee, either on demand or by a set date, the paper trail behind a family loan, a small business loan, or a loan between friends that makes the debt enforceable if the maker doesn't pay. A South Carolina note doesn't need to be notarized or witnessed to be enforceable. Confession-of-judgment clauses aren't banned outright here, but they're void for a consumer loan and require their own separate, sworn, filed statement to actually produce a judgment. You generally have 3 years from a missed payment or the note's due date to sue to collect on a written note, one of the shorter windows in the country.
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
South Carolina's general usury statute caps interest at 6% per year, but the same sentence excuses any written contract with an express rate agreement, so a signed promissory note can carry any rate the maker and payee agree to. Without a stated rate, the default legal rate is 8.75% per annum. (South Carolina Code Sections 37-10-106, 34-31-20)
- 3
If the lender is regularly engaged in the business of making loans and the loan is a "consumer loan" (personal, family, or household use, $25,000 or less principal, or secured by land), the finance charge is capped separately at 12% per year for an ordinary lender or 18% per year, or a rate filed with the Department of Consumer Affairs, for a supervised lender. An isolated private person-to-person note is not a "consumer loan" and doesn't fall under this tier. (South Carolina Code Sections 37-3-104, 37-3-201, 37-3-305)
- 4
A South Carolina promissory note does not need to be notarized or witnessed to be enforceable. South Carolina Code Section 36-3-104 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 (a clause letting the payee get a court judgment without a full lawsuit) aren't banned outright in South Carolina; the negotiable-instruments statute even allows a note to include one without losing its status as a negotiable instrument. But such a clause is void if the note is a "consumer loan," a consumer credit sale, or made by a licensed consumer finance company, and even where it's allowed, producing an actual judgment requires a separate signed, sworn statement filed with the clerk of court, not just a clause in the note. (South Carolina Code Sections 36-3-104, 37-3-407, 34-29-170, 15-35-350)
- 6
You generally have 3 years from a missed payment or the note's stated due date to sue to collect on a written promissory note in South Carolina. (South Carolina Code Section 15-3-530)
- 7
If a South Carolina promissory note is secured by personal property rather than real property, the lender generally needs to file a UCC-1 financing statement with the South Carolina Secretary of State to protect its priority against other creditors. Promissory notes are commonly used in South Carolina for both family loans and business or LLC loans. (South Carolina Code Section 36-9-310)
Key decisions before you file
Before you file a Promissory Note in South Carolina, 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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South Carolina Requirements for Promissory Note
6% per annum by default, but any rate may be agreed upon a written contract with an express rate agreement. Absent a stated rate, the default legal rate is 8.75% per annum (Section 34-31-20).
A lender making supervised consumer loans at rates above the ordinary consumer-loan cap must file a maximum rate schedule with the South Carolina Department of Consumer Affairs and post it at each place of business; this filing requirement does not apply to a private person-to-person note.
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 3 years from a missed payment or the note's stated due date to sue to collect on a written promissory note.
The Consumer Protection Code's consumer-loan rate tier and disclosure rules apply only to a loan made by a person regularly engaged in the business of making loans, for personal, family, or household use, of $25,000 or less or secured by land; an isolated private person-to-person note does not trigger these rules.
A confession-of-judgment authorization is void if the note is a consumer loan; for a note outside that category, the authorization doesn't affect negotiability, but entering an actual judgment still requires a separate signed, sworn statement filed with the clerk of court under Section 15-35-350.
If a note is secured by personal property, the lender generally must file a UCC-1 financing statement with the South Carolina Secretary of State to perfect and prioritize its security interest against other creditors.
South Carolina does not require a promissory note to be notarized or witnessed to be enforceable; notarization is optional and used only for evidentiary purposes.
Frequently Asked Questions
South Carolina caps interest at 6% per year, but the same statute excuses any written contract with an express rate agreement, so a written promissory note can carry any rate the maker and payee agree to. Without a stated rate, the default legal rate is 8.75% per year. If the lender is regularly engaged in the business of making loans and the loan is a "consumer loan" (personal, family, or household use, $25,000 or less), the rate is separately capped at 12% per year for an ordinary lender or 18% per year, or a rate filed with the Department of Consumer Affairs, for a supervised lender.
No. South Carolina Code Section 36-3-104 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 (any rate is fine for a written note between private parties, subject to the lower consumer-loan tier if the lender is in the business of lending), the repayment schedule, what counts as default, and the signatures of the maker and payee. A confession-of-judgment clause is legal for a general note but void for a consumer loan, so leave it out of a personal, family, or household loan.
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 South Carolina Code Section 36-3-104: 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 South Carolina 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. South Carolina allows a confession-of-judgment authorization in a general note, but the payee still needs to file a separate signed, sworn statement with the clerk of court to get an actual judgment, and the clause is void entirely if the note is a consumer loan.
Generally 3 years from a missed payment or the note's stated due date, under South Carolina's statute of limitations for actions on a contract (South Carolina Code Section 15-3-530). That's a shorter window than many other states, so waiting too long can mean losing the right to sue on the note.
Yes. Promissory notes are commonly used in South Carolina for both family loans and business or LLC loans. A family loan from a private lender who isn't regularly engaged in the business of lending isn't a "consumer loan" under the Consumer Protection Code, so it isn't subject to the 12%/18% consumer-loan rate tier or the Department of Consumer Affairs filing requirements that apply to a business lender.