Texas Promissory Note

A secured or unsecured loan note with installment or lump-sum repayment, interest within your state's legal limit, late fees and default terms.

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Texas rules that this document follows

Maximum interest (private loans)10% per year — 10% per year max unless the creditor elects an optional ceiling (Fin. Code ch. 303): weekly ceiling = 2x the auction rate of 26-week T-bills, floor 18%, cap 24% (28% for certain commercial loans over $250,000)Source: Tex. Fin. Code § 302.001(b); § 303.009
Legal rate when none is stated6%Source: Tex. Fin. Code § 302.002 (6% beginning 30 days after the debt is due, absent agreement)
Late feesNo statutory cap on late fees for private (non-consumer-lender) loans; fee must be a reasonable liquidated-damages estimate and, together with interest, must not push the effective rate above the usury ceiling
Time to sue on a written note4 yearsSource: Tex. Civ. Prac. & Rem. Code § 16.004(a)(3); Bus. & Com. Code § 3.118 (notes, 6 years)
Notarization / witnessesNot required (optional for evidentiary value)

Rules current as of 2026-09-07. Statutes change; verify before relying on them.

How to use this Promissory Note in Texas

Keep the interest rate at or below the Texas ceiling shown above; a usurious note can cost the lender all interest and more. For loans between family members, the IRS applicable federal rate (AFR) is the minimum to avoid imputed-gift issues on loans above $10,000.

Sign one original; the lender keeps it and the borrower keeps a copy. When the note is paid, the lender should mark it 'PAID IN FULL' and return it.

Frequently asked questions

What is the maximum interest rate I can charge in Texas?

10% per year for a private written loan (Tex. Fin. Code § 302.001(b); § 303.009). 10% per year max unless the creditor elects an optional ceiling (Fin. Code ch. 303): weekly ceiling = 2x the auction rate of 26-week T-bills, floor 18%, cap 24% (28% for certain commercial loans over $250,000)

Does a promissory note need a notary or witnesses?

No. A note signed by the borrower is enforceable in Texas. Notarizing is optional; for a secured loan, file a UCC-1 or note the lien on the vehicle title to protect the lender.

How long can the lender sue on an unpaid note?

4 years from default (Tex. Civ. Prac. & Rem. Code § 16.004(a)(3); Bus. & Com. Code § 3.118 (notes, 6 years)).

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FormsByState provides self-help document templates and general information, not legal advice. We are not a law firm. For advice about your situation consult a licensed attorney in your state.