Make a Nevada Promissory Note

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

In Nevada, there is no maximum interest rate. Lenders and borrowers may agree to any interest rate (and other fees) they’d like as long as it is in writing. If nothing related to interest in mentioned, the default interest rate is the contract or prime rate of Nevada’s largest bank plus 2%.

How to Write a Nevada Promissory Note

A Nevada promissory note must be written to outline the relationship between the parties, document the loan amount and interest rate, and explain the terms and conditions of the agreement. This starts by creating the proper title. If the promissory note is secured, it should be titled as such. For example, Secured Nevada Promissory Note. From there, certain information is listed to create the scope of the agreement between the parties. This is done by using:

• The creation date for the promissory note. This date shows the date that the parties voluntarily entered into the agreement. The date is formatted as month, day, and year. The date that the promissory note is signed is also important.
• The identity of each party to the agreement and the role they’re in. The parties should be identified by the legal name and their role within the agreement. For example, Jonathan Smith, Borrower. If there is a co-signer, their information and title should also be included.
• The mailing address for each party. In addition to including the mailing address for each party, a secured promissory note should also include the physical address for the borrower and any co-signer. This may be helpful if the lender must retrieve collateral. If the lender has a main mailing address and a separate address for payments, the payment address should be included in the repayment agreement portion of the promissory note.
• Principal balance. This is the amount of money that the lender provided to the borrower. This section does not include the interest rate. Before the promissory note is signed, this number should be reviewed for accuracy.
• The amount of interest charged by the lender. Remember that there is no maximum interest rate in Nevada. The promissory note may use any interest rate. If no interest rate is mentioned, the amount charged is the contract or prime rate of the State’s largest bank plus 2%.
• Payment agreement. The payment agreement explains how the borrower will repay the loan. It includes the number of payments that must be made (known as installments), when those payments must be made, the amount for each payment, and whether a late fee will be charged if the payment is late. If so, the amount of the late fee should be documented as well as how many days after the payment was due that the late fee will be charged.

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If the promissory note is secured, remember to include the proper information about the collateral. Without this information, the court may not treat the note as secured.

After that information is provided to create the basic agreement, there are some basic clauses included helping explain the terms and conditions. The following isn’t a full list of clauses. It is just a list of the most commonly included ones:

• Interest Due in the Event of Default. This is the amount of interest the borrower will be charged if they default on the loan. This is particularly important since there is no limit of interest that may be charged in Nevada. The agreement may start off with a lower interest rate and a default may cause a much higher interest rate to be charged.
• Payment Allocation. This is how the payments from the borrower are split between the principal balance and the interest.
• Prepayment. Whether the borrower will be assessed with a financial penalty if they pay the loan off earlier than the agreed-upon contractual life of the loan.
• Acceleration. The lender has the right to demand immediate and full repayment of the balance due if the borrower does not comply with the terms of the agreement.
• Attorney Costs and Fees. How attorney costs and fees that may arise for the parties from a legal disagreement will be handled.
• Waiver of Presentments. The lender is not required to be physically present when the borrower makes payments.
• Severability. If one portion of the Nevada promissory note is found to be invalid, the remainder of the note stays in effect.
• Conflicting Terms. This clause outlines how any conflicting terms in the promissory note will be clarified.
• Notice. A notice clause explains whether the lender will notify the borrower if they plan to sue them because of not complying with the note.
• Governing Law. This clause documents the state whose laws will be used if a disagreement over the document comes up.

There is no legal requirement to have a Nevada promissory note notarized. It must be dated and signed by the borrower and any co-signer who is a party to the agreement.

A Sample Nevada Promissory Note with Examples for Each Step

A Nevada promissory note can be unsecured or secured; promissory notes in Nevada are regulated by contract law and, in some cases, securities law. A secured promissory note should be titled as such ("Secured Nevada 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 Nevada 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 (there is no maximum interest rate in Nevada; the parties to a written promissory note may agree on any interest rate they like), 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, the 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 section explains 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 (there is no limit to the interest that may be charged under Nevada 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 Nevada, 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 Nevada. 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 Nevada

National Consumer Law Center

Credit Union National Association Guide to State Usury Laws                                                          

Help Center/Federal Student Aid      

CollegeScholarships.org

Greater Nevada Credit Union  

Legal Aid Center of Southern Nevada