Make a Nebraska Promissory Note

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

Under Nebraska state law, the maximum amount of yearly interest that may be charged for a promissory note is 16%. Lenders who violate usury law may find themselves in serious legal trouble.

How to Write a Nebraska Promissory Note

Writing a Nebraska promissory note memorializes a loan and repayment agreement in writing. The first step is to create the proper title. If the promissory note is meant to be secured, it should be titled as such. For example, Secured Nebraska Promissory Note. Following the title, certain information is used to show the identities and relationships between the parties and document the repayment agreement. For that, include the following:

• The date that the promissory note was created. This date, along with the date included with the signatures, helps prove that the agreement is valid. The date is also important if collections must take place in the future.
• The identity and role of each person or entity within the agreement. It is important to use the legal name of each person or entity entering into the agreement. Each person or entity should also have their role clearly mentioned. For example, PDQ Personal Loan Services, Ltd., Lender. If there is a co-signer, they should be listed as well.
• The mailing address for each party. List the mailing address for each party to the agreement. If the note is secured, include the physical address of the borrower and any co-signer if the mailing address is different. Sometimes a lender will have a mailing address for general contact and an address for payments. If the lender has a separate payment address, it should be included in the section where the repayment agreement is documented.
• The amount of the loan. This is the principal balance. It does not include the interest that the borrower will pay. Before a Nebraska promissory note is executed, review this number for accuracy.
• The interest rate charged for the loan. In Nebraska, the maximum amount of yearly interest that may be charged is 16%. It is expressed as per annum, annual percentage rate (APR), or annual interest rate.
• Repayment agreement. The repayment agreement explains how the principal balance and the interest will be repaid to the lender. This section should include the payment address, how many installment payments must be made, the amount for each payment, the due date for each payment, and if there is a late fee. The late fee amount should be documented within the agreement. It is also important to give information on when the late fee will apply to the account.

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If the Nebraska promissory note is secured, include descriptive information about the collateral. Leaving out this information practically guarantees that a legal dispute will mean that the court treats the agreement as unsecured.

Clauses are then used to outline the terms and conditions of the promissory note. Some of the most common clauses found in a Nebraska promissory note are:

• Interest Due in the Event of Default. If the borrower defaults on the loan in some way, this clause states how much interest will be applied to the account.
• Payment Allocation. This is how the payments made are split between the principal loan amount and the interest charged for the loan.
• Prepayment. This clause explains whether the borrower will be subject to a financial penalty for paying off the loan before the end of the term.
• Acceleration. The lender has the legal right to demand payment in full if the borrower does not abide by the terms of the promissory note.
• Attorney Fees and Costs. If a legal dispute arises, this clause explains how the parties agree that attorney fees and costs will be handled.
• Waiver of Presentments. The lender is not required to be physically present for the borrower to make their payments according to the agreement.
• Severability. If one part of the Nebraska promissory note is not enforceable, the rest of the agreement remains in effect.
• Conflicting Terms. This clause explains how any conflicting terms will be handled and clarified.
• Notice. This clause states whether the lender will notify the borrower if the lender plans to file a lawsuit against the borrower.
• Governing Law. This clause lists the state whose laws will be used in the event of a legal dispute.

In Nebraska, a promissory note does not need to be notarized. It must be signed and dated by both the borrower and any co-signer who is also party to the agreement.

A Sample Nebraska Promissory Note with Examples for Each Step

A Nebraska promissory note can be unsecured or secured; promissory notes in Nebraska are regulated by contract law and, in some cases, securities law. A secured promissory note should be titled as such ("Secured Nebraska Promissory Note"); it must also be further identified with specific language and requires a detailed description of the security interest (the property that will serve as the collateral). A secured promissory note should include the following section:

• Security and Priority: In this section, the borrower and lender (payee) agree that all obligations under the note will be secured by the collateral defined in the security agreement entered into between the borrower and lender. This section contains a general description of the collateral explicitly defined in the security agreement.

A secured promissory note is generally accompanied by a security agreement that allows the lender to seize the collateral (specific property) in the event of default by the borrower.

The security interest in the specific property should be outlined in a UCC financing statement. When the financing statement is filed with the appropriate government agency, the lender's interest in the specific property is deemed "perfected," giving the lender top priority over future lenders seeking a security interest in the same property.

Both unsecured and secured promissory notes in Nebraska should include the following sections:

• Definition of Terms: This section includes a list of terms and their meanings used in the loan agreement  ("As used in this Agreement, the following terms shall have the meanings set forth below").
• Payments: These are provisions relating to the terms for repayment of the amount due, including principal and interest, overdue amounts, default/nonpayment rate, manner of payment, and extension. This section should specifically note the date the promissory note was devised, the name and mailing address of the borrower and lender, the amount of money loaned to the borrower, the amount/annual percentage rate of interest to be charged (as allowed by applicable Nebraska state law governing maximum interest/usury rates for written contracts), how repayment will be made (installments, interest-only, lump sum, or, in the case of a secured promissory note, a balloon payment), the number of payments, amount of each payment, the due date of each payment, any late fee to be charged for late payment, and where and how payment is to be made.
• Allocation of Payments: This section describes how much of each payment will apply to the interest/principal.
• Guaranty/Co-Signer (optional): In this section, a third party (the guarantor) agrees to be directly or collaterally responsible for the obligation of the borrower to the lender in the event of default (the borrower fails to pay).
• Representations & Warranties: This clause provides the facts and protections in the event of default, respectively, if the statements made are not true.
• Covenants: A covenant in a loan agreement requires the borrower to fulfill certain conditions, such as punctual payment of principal, or prevents the borrower from taking certain actions.
• Defaults/Interest Due upon Default: This section defines the events that constitute a default and the interest due upon default (as allowed by applicable Nebraska state law).
• Acceleration: This section requires the borrower to repay the remaining balance in the event of a default.
• Prepayment: This section states whether there will be a prepayment penalty or if the borrower is allowed to pay a sum of money to the lender before it is due/demanded without a penalty for doing so.
• Attorney Fees and Costs: This section describes which party will be held responsible for attorney fees and court costs should a case be filed and adjudicated in court due to a default.
• Waiver of Presentments: This section allows the lender to receive payment without presenting the promissory note.
• Non-Waiver: This section states that the entire promissory note is not waived if either party waives a certain section of the document.
• Severability: This section states that the rest of the promissory note will still be valid should a particular section be found illegal or incapable of enforcement.
• Integration: This section states that the promissory note constitutes the entire agreement between the parties.
• Conflicting Terms: This section states that an amendment will resolve any issue(s) and be determinative should the promissory note include terms that conflict.
• Notices: This section states the required form of all notices, requests, demands, claims, and other communications under the note, including notice to the borrower that the lender may seek a judgment against the borrower without notice and the addresses to which all official or legal correspondence should be delivered.
• Governing Law: This section defines the state law that will govern the promissory note.
• Dated Signature: In Nebraska, both unsecured and secured promissory notes must be signed and dated by the borrower and any co-signer; the lender need not sign. There is no legal requirement for promissory notes to be witnessed or notarized in Nebraska. Still, the parties may decide to have the document certified by a notary public for protection in the event of a lawsuit.

Promissory Note Resources in Nebraska

National Consumer Law Center

Credit Union National Association Guide to State Usury Laws                                                          

Help Center/Federal Student Aid      

CollegeScholarships.org 

Nebraska Department of Education

Nebraska Dept. of Health and Human Services  

NSLP                                                                   

Nebraska State Education Association (NSEA)   

First Nebraska Credit Union