Free Hawaii Promissory Note

The Basic Terms of a Promissory Note in Hawaii

When offering financial assistance to a friend, you may sometimes do it without a second thought. Although the act is admirable and generous, it may be disastrous to lend money without making a formal agreement. This means that if your friend fails to pay the loan, you may not qualify for legal redress to claim the money.

Therefore, a promissory note offers a legal framework to lend money and have proof of the financial transaction.

Here we examine a Hawaii promissory note and its terms.

What Is a Promissory Note?

It is a written agreement that defines the particulars of a loan and memorializes the transaction. In Hawaii, a promissory note is a contract between the lender and the borrower, sometimes known as a "promisor" and "promisee," respectively.

A Promissory note in Hawaii is a financial instrument enforceable under Article 3 of the Hawaii Codes.

Types of Promissory Notes

Hawaii codes provide for two primary forms of promissory notes as follows:

Secured Promissory Note

When you enter a secured contract, the lender will have the legal right to collect any property you designate as collateral. Typically, property collection happens when you fail to honor the legal agreement for loan payment. Before signing the contract, you’ll mutually agree on suitable collateral, which should be a valuable item.

Unsecured Promissory Note

Unsecured promissory notes do not include collateral for the loan. Therefore, lenders can recover the borrowed amount through the courts. Since an unsecured note has no legal mechanisms to recover the money, you should only sign it with a close friend or family member with good credit history.

What Is Hawaii’s Usury Rate?

Hawaii has provisions for interest under Usury laws. According to the State’s Revised Statutes Section 478:2, a lender may not charge an interest rate exceeding 10% per year. Consumer and home business loans may attract a maximum 12% interest rate per year.

Terms of a Hawaii Promissory Note

For a Hawaii promissory note to remain valid, it should contain clauses explaining the loan terms.

Here are ten significant clauses you should consider:

Choice of Law

A promissory note should define the state laws governing and regulating the agreement. The clause comes in handy if the lender and borrower are in different states.


The lender may wish to sue the borrower in case of the loan. Therefore, the clause explains the circumstances under which the lender may institute legal measures.


Promissory notes provide accelerated action that allows lenders to compel borrowers to clear the balance in case of defaulted terms.

Interest Due

If the borrower default on loan repayment, the lender may calculate an accrued interest for the defaulted period. Therefore, the clause explains the interest paid in case of a breach of terms.

Payment Allocation

The clause highlights how the lender allocates the loan payment to interest and principal.


Some lenders charge an additional fee for paying the loan before time. The clause, therefore, specifies if the borrower will incur additional charges from early payment.

Attorney’s Fees

Promissory notes contain formal agreements on settling attorneys’ fees in case of court disputes. In Hawaii, some lenders will have a shared approach where each party pays the attorney’s costs. Some, however, will leave every expense to the borrower in case of a breach of the terms.


A Hawaii promissory agreement may have conflicting clauses, hindering enforceability. The clause highlights how to amend the inconsistent clauses for the document to remain valid.

Presentments Waiver

Lenders often include a clause enabling borrowers to continue paying the loan even if they are not physically present when payment is due.

Are you a resident of Hawaii wondering where to get a promissory note document? Download a printable promissory note from our site today!