Kentucky Promissory Note Template [PDF + Download]

A Kentucky promissory note is a legal document in which a borrower promises to pay the principal amount they owe to the lender, whether with interest or not. This official document also stipulates the due date and other terms.

This note is legally binding in this state. It formalizes the Kentucky loan agreement and enforces the borrower’s debt repayment obligation.

Appointing a lawyer for promissory notes is not mandatory, so you can explore the Kentucky promissory note template on our website to gain a better understanding of promissory notes and create a document tailored to your needs.

Types of Promissory Notes in Kentucky

There are two major types of promissory notes in Kentucky—simple (unsecured promissory note) and secured promissory note. Each of them serves the same purpose. However, they differ regarding the way repayments are secured.

Here’s how:

Types of Promissory Notes

#1. Simple (Unsecured Promissory Note)

A simple or unsecured promissory note stipulates the borrower’s promise to pay the debt with or without interest rate or fees. It also states details like the due date and other conditions. Yet, an unsecured promissory note does not pledge collateral, which may be property or assets.

Therefore, the lender cannot claim a collateral-related recovery in default cases. Still, depending on the terms of the Kentucky debt agreement and promissory note, the lender can take legal action.

#2. Secured Promissory Note

A secured promissory note states the borrower’s promise to pay the debt, as well as dates and conditions, but it also includes collateral. If a borrower cannot pay off the debt, the lender has the right to seize the borrower’s asset or property and sell it to cover the debt with or without interest.

In cases of a borrower’s default, the lender may not always be obliged to take legal action for recovery. For instance, the lender can repossess the borrower’s car without a notice. In general, the lender’s success rate is high on such occasions.

Signing Requirements for Promissory Notes in Kentucky

The Kentucky promissory note requirements ensure the document's validity and enforcement.

Let’s see the requirements one by one:

Signing Requirements

The note must be in written form.
Both parties must sign the agreement.
The note must contain the lender’s and the borrower’s names and addresses, the loan amount and usury rate amount, repayment terms, and any specific conditions both parties agreed upon.

Witness presence is not mandatory but recommended. The same applies to witnesses signing the document. In addition, notarizing the documents is not obligatory but is also proposed for loans over $10,000.

Lastly, it is always a good idea to check a promissory note sample before making it official to ensure you fulfill all requirements.

Statutory Considerations for Kentucky Promissory Notes

The Kentucky promissory note regulation is based on the Kentucky Revised Statutes Chapter 360, a summary of which you can find in the table below:

Loan Type	Interest Rate
Without a Contract	8%
With a Contract	If agreed upon, 19% or Federal Discount Rate + 4% (the lower one counts)
Judgments	6% if not agreed otherwise, in which case the interest rate cannot exceed the rate agreed in the contract; 12% on unpaid child support
High-Cost Home Loans	For loans between $15,000 and $200,000, the prepayment penalties must not exceed 3%, 2%, or 1% for the first, second, and third years, separately. The closing fees are either 6% or $3,000 (the greater one counts)
Credit Union Loans	Maximum of 10% of the capital; 2% per month for savings accounts
Pawnbrokers	2% per month; the fee cannot exceed 1/5 of the loan amount
Consumer Loan Companies	3% per month for loans below $3,000 and 2% for loans higher than $3,000

Kentucky’s usury laws state that the maximum interest rate for personal and business loans is 8% per year. This rate can only be higher if both parties agree to it.

How to Enforce a Promissory Note in Kentucky?

To enforce a promissory note in Kentucky, you must take steps, such as taking legal action to repossess collateral, sending a demand letter to the borrower, and filing a claim in court.

First, the effectiveness of an enforceable promissory note in Kentucky depends on whether the note is secured or unsecured. If the note is secured, the lender can repossess the borrower’s property or assets to recover the loan. The lender can do so by hiring a repossession agency and paying a fee for such services.

In the case of an unsecured note and the borrower’s default, the lender must first send a demand letter. If the borrower does not pay the debt, the lender can file a claim in small claims court, requesting repayment of up to $2,500, as stated in the Small Claims Handbook. The 355.3-118 Statute of Limitations stipulates that such a process must be started within six years after the due date.

How Can a Promissory Note in Kentucky Be Changed or Revoked?

A promissory note in Kentucky can be changed or revoked if both parties agree to this. No verbal agreements are considered valid. Instead, all revocations and modifications must be in written form.

Before a new repayment agreement becomes valid, every party must review it and ensure they agree to the new terms—interest rate, dates, principal amount, etc. All parties must also sign the agreement.

The most common reasons for modification involve changes in payment schedule, early payment, and interest rate changes. Modifying or revoking a Kentucky promissory note with legal advice from an attorney can help ensure the agreement’s compliance.