Kentucky Promissory Note Form

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Kentucky Promissory Note: What Is It?

A Kentucky promissory note is a contract between a lender and a borrower. The lender provides the borrower with a loan, and the borrower promises to repay it according to the terms of the promissory note. The common parties involved are the lender, borrower, and a co-signer. Kentucky promissory notes may be secured or unsecured. With a secured promissory note, the lender has the right to collect collateral to pay some or all of the loan balance if the borrower defaults. A common type of secured promissory note is a car loan. If the borrower doesn’t pay as promised, the lender repossesses the car. Promissory notes must comply with both common law and created statutes. For promissory notes to be enforced by a Kentucky court, it must be documented in writing.

What Is the Maximum Amount of Interest That May Be Charged?

The maximum amount of interest that may be charged in the State of Kentucky is 8%. However, there are multiple exceptions to this rate of interest. You can learn more about exceptions by either reading Kentucky Revised Statute Chapter 360 or speak with a lawyer.

How to Write a Kentucky Promissory Note

A Kentucky promissory note should start by using a title that explains whether it is secured or unsecured. If it is secured, the word should be used in the title. Without it, a legal dispute may result in the court treating the promissory note as unsecured. Then, certain information should be included to create the scope of the document:

  • The creation date of the promissory note. Formatted as month, day, and year, the date of creation is placed below the title. The date is important because it impacts how long the lender would have to collect on the agreement if the borrow defaults.
  • Identification of the parties. This includes the legal name of each party. They should also have their role identified. Co-signers, if there are any, should also be identified. For example, Jorge Medina, Co-Signer. It’s also important to list the mailing address of each party. If the note is secured, the physical address of the borrower and any co-signer should be listed. If the lender’s payment address is different from the mailing address, the payment address should be listed along with other payment information.
  • The principal amount of the loan provided. This is the amount that the lender provides. It does not include the interest amount. Before the Kentucky promissory note is executed, review the amount listed for accuracy.
  • Interest charged by the lender. This is the amount of interest charged by the lender. The maximum interest rate in Kentucky is 8% per year although there are some exceptions.
  • The payment agreement. Most Kentucky promissory notes rely on payment installments. The agreement should list the number of installments that will be made during the course of the loan, when they are due, how much is paid for each installment, and whether there is a late fee. If there is a late fee, the amount of the fee should be listed and when it will be assessed if the payment is not received.

Kentucky promissory notes that are secured should also give an accurate description of the collateral that will be collected if the borrower defaults.

After this information, the Kentucky promissory note should include some basic clauses. This isn’t a full list of clauses, but it is the most common ones used:

  • Interest Due in the Event of Default. This clause explains how much interest the borrower will pay if they default on the loan.
  • Payment Allocation. This clause explains how the received payments are split between the principal balance and the interest on the loan.
  • Prepayment. If a borrower pays off a loan before it’s scheduled to end, this is known as prepayment. A prepayment clause explains whether the borrower will be financially penalized for prepayment.
  • Acceleration. If the borrower violates the Kentucky promissory note in some way, this clause allows the lender to demand immediate payment in full.
  • Attorney Fees and Costs. This clause explains how attorney fees and costs will be handled if there is a legal dispute between the parties that result from the agreement.
  • Waiver or Presentments. This clause states that the borrower is required to make payments even if the lender isn’t physically present.
  • Severability. This clause keeps the rest of the promissory note in effect if one area of it is found to be unenforceable.
  • Conflicting Terms. This clause addresses how conflicting terms in the promissory note will be handled. The most common way of handling them is by creating an amendment that clears up the confusion and governs the agreement.
  • Notice. A notice clause informs the borrower whether or not the lender will notify them if they plan to sue for default.
  • Governing Law. A governing law clause lists the state whose laws will be used to govern the agreement and any legal dispute that arises from it.

For most Kentucky promissory notes, there is no legal requirement to have the document witnessed or notarized. The borrower and any applicable co-signer should both sign and date the document.


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