Make a Oklahoma Promissory Note

What Is the Maximum Interest Rate That May Be Charged in Oklahoma?

The maximum interest rate that may be charged is 6% unless the parties agree to another rate in writing. Additionally, when a loan is made from one person to another, the maximum interest rate is 10%.

How to Write an Oklahoma Promissory Note

The first step to take to write an Oklahoma promissory note is to create the proper title. Secured promissory notes must have the word “secured” in the title. Without it, a legal disagreement in court could mean that the court treats the promissory note as unsecured. Next, use information about the involved parties and the loan to explain why the agreement exists and how the loan will be repaid:

• The date that the Oklahoma promissory note was created. This date is placed below the title. This date, and the date of the signature, is formatted as month, day, and year. The creation date and the signature date are important components for proving the validity of the agreement. It also helps determine legal deadlines for certain actions.
• Identification of the parties involved as well as the role they hold in the agreement. Use the legal name of those involved as well as their roles. This includes any co-signer who may be a party to the agreement. Lenders or borrowers may also be entities. For example, City Auto Loans, Ltd., Lender.
• The full mailing address for each party. This includes the city or town, state, and zip code. If the Oklahoma promissory note is secured, include the physical address for the borrower and any co-signer if it is different from the mailing address(es) listed. Lenders may have a main mailing address and an address for payments. If there is a separate address for payments, the payment address should be listed with the repayment information for easy reference.
• The principal amount provided to the borrower. This is the amount of money provided by the lender to the borrower. Interest is not calculated into that amount. Before an Oklahoma promissory note is executed, make sure that this number is accurate. This is important because promissory notes may be legally binding documents.
• The interest rate for the loan. This is the amount of interest the lender is charging for the loan. The borrower and lender may agree on an amount in writing that is above the 6% limit unless it is a person-to-person loan. Then, the maximum interest is 10%. The interest may be expressed as an annual percentage rate (APR), per annum, or per year.
• Repayment agreement. The purpose of this section is to explain how the loan will be repaid by the borrower. It includes the payment address for the lender, the total number of payments that must be made to satisfy the loan, the due date for each payment, and the amount of each payment. If the lender charges a late fee, the amount of the fee should be documented as well as when the fee will be added onto the account.

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If the Oklahoma promissory note is secured, make sure that there is a description of the collateral. Without this, a court may hold that the agreement between the parties is unsecured.

Then, an Oklahoma promissory note uses clauses to create the terms and conditions of the agreement. The most commonly used clauses are:

• Interest Due in the Event of Default. If the borrower doesn’t follow the terms of the agreement, they will be charged an interest rate that is documented in this clause. This interest rate is often higher than the initial interest rate.
• Payment Allocation. How the payments made by the borrower will be split between the principal balance and the interest accrued.
• Prepayment. Whether the borrower will be required to pay a financial penalty for paying the loan off before the end of the contract.
• Acceleration. The lender has the legal right to demand that the borrower fully repay the outstanding balance immediately because the borrower did not comply with the terms of the agreement.
• Attorney Fees and Costs. How attorney fees and costs will be split if they are incurred by one or both parties if there is a dispute or disagreement over the promissory note.
• Waiver of Presentments. The lender has no legal requirement to be physically present when the borrower makes their payments.
• Severability. If one portion of the Oklahoma promissory note is found to be unenforceable, the rest of the promissory note remains valid.
• Conflicting Terms. How any conflicting terms within the agreement will be clarified for the parties.
• Notice. Whether the borrower will be notified if the lender plans to sue them for defaulting on the agreement.
• Governing Law. The state whose laws will be used to mediate or litigate any dispute related to the promissory note.

There is no legal requirement to have an Oklahoma promissory note notarized. To execute the document, it should be signed and dated by the borrower. If there is a co-signer, the co-signer must also sign and date it if the lender wants the co-signer to be legally liable if the borrower doesn’t pay.

A Sample Oklahoma Promissory Note with Examples for Each Step

An Oklahoma promissory note can be unsecured or secured. A secured promissory note must be titled as such; 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 Oklahoma 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 Oklahoma state law governing maximum interest/usury rates for written contracts; the parties, may, however, agree, in writing, on a higher amount, unless the promissory note is for a person-to-person loan), 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 clause 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 (as allowed by applicable Oklahoma 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 Oklahoma, 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 Oklahoma. 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 Oklahoma

National Consumer Law Center

Credit Union National Association Guide to State Usury Laws                                                          

Help Center/Federal Student Aid      

CollegeScholarships.org

Oklahoma College Assistance Program (OCAP)         

Educational Credit Management Corporation (ECMC)              

Oklahoma Student Loan Authority (OSLA)   

Oklahoma's Credit Union