Oregon Promissory Note: What Borrowers Should Know?

If you take a car loan, the financier will want to be sure you’ll pay back the loan fully. As a result, the lender may require you to sign a legal agreement promising that you’ll pay the loan within an agreed time.

A car loan is an example of a promissory note because it defines your legal obligations towards the loan. It also protects your rights as a borrower so that only the property you designate as security is liable for the loan.

Here we define a promissory note and how it applies in Oregon.

Oregon Promissory Note: An Overview

An Oregon promissory note is a contract between the lender and borrower, recognizing the existence of a loan and highlighting how the borrower will pay it back.

In Oregon, a borrower promissory note is legally binding and subject to Oregon Revised Statutes, Section 82.010. Like other states, Oregon recognizes two main types of promissory notes: secured and unsecured.

An Oregon secured note includes collateral that the borrower may use to settle the whole or part of the loan. If the borrower can’t pay the loan, the lender reserves the legal right to take the collateral.

On the other hand, an unsecured note has no guarantee for repayment except the borrower’s signature. Unsecured notes carry high liability to the lender because only a small claims court can intervene if the lender defaults on the loan.

What Is the Interest Rate for Oregon Promissory Notes?

The interest rates in Oregon are subject to Section 82.010(1), (3) of the state usury laws. Under the laws, the legal rate for promissory notes is 9% per annum. However, other factors such as the loan amount may affect the legal interest rate.

For loans not exceeding $50,000, the maximum interest rate is 12% or up to 5% above the Federal discount rate. For loans exceeding $50,000, the lender and borrower may agree on a standard interest rate and put it in writing.

How to Write an Oregon Promissory Note?

Signing a promissory note is pretty easy if you follow the proper steps. And what’s more, you can download and fill out a ready template without visiting an attorney here at this website.

First, find a suitable template applicable to the state of Oregon. Once you find it, begin by labeling the form as either secured or unsecured. For instance, a secured note should have “Oregon Secured Promissory Note” as the title.

Afterward, you can include all the relevant information as follows:

The Date of Creating the Agreement

The date appears below the title, following a month-day-year format. The date is critical and comes in handy should a legal dispute arise. It defines legal deadlines, such as when the lender may pursue recovery options owing to a breach.

Parties to the Contract

A conditional promissory note includes parties who may be individuals or legal entities such as companies. These include the legal names of the borrower and lender and their respective roles in the agreement. If there’s a co-signer, they should also appear under the parties’ section.

Mailing Addresses

Indicate the mailing addresses of the lender and borrower, stating the town, state and zip code. The physical address is critical for a secured promissory note if the lender wishes to retrieve collateral from the borrower.

The Principal

An Oregon promissory note clearly defines the amount borrower receives from the lender. However, the principal amount doesn’t include accrued interest as it is calculated separately.

Interest Rate

The promissory note includes the annual interest rate for the loan. Generally, the interest rate shouldn’t surpass the Federal discount’s maximum interest rate.

The Payment Agreement

The payment agreement explains how the debtor will pay the loan: lump sum or installment. For installment payment, the section highlights the number of monthly installments and the amount of each.

Signature

An Oregon note contains the borrower’s signature confirming the agreement's validity.

Are you ready to create an all-inclusive promissory note for a financial transaction? The good news is you don’t need to visit an attorney in Oregon. Simply download a free printable template from our website today!