California Promissory Note
California Promissory Note & Maximum Interest Rate
For a basic personal loan, California caps interest at 10% per year.
Interest rate limits in California
For a personal loan between individuals (not a bank or licensed lender), California caps the interest rate at 10% per year under the state Constitution's usury provision.
If a note doesn't state a rate at all, California's default legal rate of 7% per year applies instead.
Loans made by banks, credit unions, and licensed finance lenders are exempt from these caps — this guidance is scoped to simple personal notes between individuals.
Reference: California Constitution, Article XV, §1. This is general educational information scoped to a basic personal loan between individuals — not legal advice. Usury law has many exceptions (banks, licensed lenders, business loans, and loan size thresholds). Confirm current California law and any applicable exceptions before relying on a rate.
California key points
- 10% per year cap for personal, family, or household-purpose loans between individuals.
- 7% per year applies by default if the note is silent on the rate.
- Banks, credit unions, and licensed lenders are exempt from the personal-loan usury cap.
How to create your California promissory note
- 1. Open the iRunDocs promissory note generator with California selected.
- 2. Enter the lender, borrower, principal amount, and repayment terms.
- 3. Set an interest rate within California's limits above, or leave it interest-free.
- 4. Review the PDF preview, download, sign, and keep a copy with your records.
Frequently asked questions
What is the maximum interest rate for a personal loan in California?
10% per year for a personal, family, or household-purpose loan between individuals, under the California Constitution's usury provision. Licensed lenders and banks are exempt.
What interest rate applies if a California promissory note doesn't state one?
7% per year applies by default when no rate is specified.
Does California's usury cap apply to bank loans?
No. Banks, credit unions, and licensed finance lenders are exempt from the personal-loan usury limits.
Interest rate limits in other states
iRunDocs provides document tools and educational information. It is not a law firm and does not provide legal advice.