South Carolina Promissory Note: What Makes a Valid Contract?
Are you looking forward to establishing a financial relationship involving lending or borrowing? One of the best ways to safeguard the agreement is signing a promissory note. And what's more, you don't' need to hire an attorney to help you fill out the document.
Here, we’ll highlight what makes a valid promissory note in South Carolina. Plus, we’ll take you through filling out a promissory letter.
But First: What’s a Promissory Note?
It is a written document usually completed following an agreement between the lender and the borrower. The borrower promises to pay an agreed monetary balance within a specified period in the contract.
Types of Promissory Laws in South Carolina
In South Carolina, a promissory letter is a legal document subject to contract and usury laws. Like other states, South Carolina recognizes two main types of promissory notes: secured and unsecured.
South Carolina Secured Note
As the name suggests, a secured promissory letter has a security item guaranteeing payment for the loan. Thus, the lender has legal rights to the security item if the borrower doesn’t honor the payment terms.
Before including an item as collateral, the borrower should consist of an accurate description of the item, without which the court may not uphold the right to collect the property. Usually, a security item is any valuable property proportional to the loan value.
South Carolina Unsecured Promissory Note
An unsecured note doesn't have collateral and carries a higher financial risk to the lender. If the borrower dishonors the payment terms, the lender can only seek legal intervention from the court to recover the balance.
South Carolina Usury Rates
South Carolina clearly defines the usury rates for a standard promissory note under Section 34-31-20 of the state laws. Under the rules, the legal rate for promissory notes is 8.75% per annum. However, for consumer loans not exceeding $25,000, the maximum rate could be 12% per annum.
Filling Out a Promissory Note in South Carolina
You can find and fill out a promissory note template from this website. Once you have the form, you can customize it to suit your unique needs for the agreement.
The following steps apply in filling out the form:
Write the Date
Indicate the date of signing the agreement, starting with the month, day, and year. The date is an essential component indicating when you created the agreement and the relevant timelines for the payment.
Write the Principal Amount
Establish the principal loan amount in US Dollars. Note that the principal amount doesn’t include interest accrued from the payment.
Indicate Personal Information
The document contains the legal names and addresses of the lender and borrower. In addition to personal details, the borrower should also include a physical address when signing a secured promissory note.
Indicate Payment Details
You can list an appropriate option for the payment schedule in the section. For instance, if the lender only wants installment options, write the number of installments and the value of each installment. The payment section also includes the maturity date when the loan should be complete.
Write the type of Promissory Note
A promissory note may be secured or unsecured. If you’re writing a secured note, indicate clearly to affirm your commitment to the agreement.
Sign the Contract
A valid promissory letter should have your signature (borrower) and that of your cosigner (if available). However, in South Carolina, you don’t need to notarize your agreement to make it valid.
Promissory notes are vital financial instruments in any lending agreement. However, assigning a promissory note can be tedious, especially if you’re doing it for the first time. Did you know you can download a promissory note without visiting an attorney? Do not hesitate to download a promissory note template from our website today!