A promissory note can be a very potent document for protecting moneylenders while also providing borrowers a pathway to liquid capital. Promissory notes can be either “secured” (when an asset such as a vehicle or real estate is put up as collateral), or “unsecured.” Since unsecured loans carry more risk for the lender, they are usually associated with higher interest rates.
Before you begin creating your Utah promissory note form, it’s important to be aware of state-specific regulations that apply to the loan.
Utah Promissory Note Regulations
One of the most important things to know before creating a promissory note is your state’s usury laws prohibiting the lender from charging excessive interest on a loan.
Utah is unique in that it does not specify an interest ceiling on loans that have written agreements. Rather, it allows for an “unconscionable” provision that governs interest rates as dictated by the market and the borrower’s personal financial history. For written agreements, the maximum interest rate charged on a document such as a promissory note is 10% per annum.
Utah Secured Promissory Note
When a promissory note is “secured,” that means the borrower is putting something of value up as collateral in exchange for liquid capital. This guarantees that the lender can recoup the value of the loan should the borrower default on repayment.
Secured promissory notes need to also include a security agreement that details the collateral that the borrower is supplying, be it a vehicle, house, or another asset. Be as detailed as possible when describing the asset in the security agreement.
In this section, you’ll find a free Utah promissory note template.
Utah Unsecured Promissory Note
Unsecured promissory notes are less common, and they do not guarantee that the lender will recoup the amount of money paid out in the loan. Because the risk is higher, the interest rates for these loans are almost always higher for the borrower. Unsecured notes are most frequently offered to borrowers with an excellent credit history or a high-income job.
Here, you can find a promissory note template for the state of Utah.