Updated October 11, 2026. Quick answer: 8% simple interest with a signed written agreement, up to 24% on an unsecured loan that meets the statute’s conditions, and 6% when the law provides nothing else (Commercial Law sections 12-102 and 12-103).
Maryland promissory note at a glance
| Item | What the documents say |
|---|---|
| Maximum interest rate on a private loan | 8% simple interest with a signed written agreement; up to 24% on a loan made on or after July 1, 1982 that is unsecured or secured by collateral other than a savings account and meets the section’s conditions; any rate for some loans, such as a loan to a corporation or a commercial loan over $15,000 not secured by residential real property |
| Rate if the note names none | Not stated in the documents read; 6% a year simple interest is the cap under section 12-102 unless the law provides otherwise (for example, a signed written agreement under section 12-103) |
| Penalty for charging too much | A lender that violates the usury subtitle forfeits to the borrower the greater of three times the excess interest and charges collected, or $500, unless the lender cures within 30 days of signing the loan contract by notifying the borrower and substituting a legal rate (section 12-114 does not apply to loans subject to section 12-114.1) |
What Maryland law says about interest
Except as the section provides otherwise, a lender may charge up to 8 percent simple interest a year if a written agreement signed by the borrower states the rate, and up to 24 percent on a loan made on or after July 1, 1982 that is unsecured or secured by collateral other than a savings account, if the section’s conditions are met. Some loans, such as a loan to a corporation or a commercial loan over $15,000 not secured by residential real property, may carry any rate.
Unless the law provides otherwise, interest may not exceed 6 percent per annum simple interest on the unpaid principal balance.
A lender that violates the usury subtitle forfeits to the borrower the greater of three times the excess interest and charges collected or $500, unless the lender cures within 30 days of signing the loan contract by notifying the borrower and substituting a legal rate; the 24 percent tier requires the section’s listed conditions.
The sources in their own words
- Interest limit: “effective rate of simple interest of 6 percent per annum” (Commercial Law § 12-102).
- Interest limit: “written agreement signed by the borrower which sets forth the stated rate” (Commercial Law § 12-103).
- Interest limit: “an effective rate of simple interest not in excess of 24 percent per year on the unpaid principal balance, provided that” (Commercial Law § 12-103).
- Time limit to sue: “commenced within 6 years after the due date or dates stated” (Commercial Law § 3-118).
- Signature: “written undertaking to pay money signed by the person undertaking to pay” (Commercial Law § 3-103).
- Time limit to sue: “within three years from the date it accrues” (Courts and Judicial Proceedings § 5-101).
If you’re ready to put it in writing
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Signing the note: signature, witness, notary
Maryland’s UCC defines a promise as a written undertaking to pay money signed by the person undertaking to pay, and a maker as one who signs or is identified in a note. A note is signed by the person who promises to pay.
None of the sections read for Maryland requires a witness or a notary for the note itself. A note secured by real property is a separate question; see what an intra-family mortgage requires.
How long a lender has to sue
Under Maryland’s enacted UCC 3-118, an action on a note payable at a definite time must be commenced within 6 years after the due date, and the general civil limit is 3 years.
A worked example: a $15,000 note
Suppose a relative lends you $15,000 and you sign a note for 5 years at 7% a year, paid monthly. With r = 7%/12 and n = 60 months, the level payment is principal times r divided by (1 minus (1 + r) to the power of negative n): $297.02 a month, computed here from these assumed inputs, not quoted. Over the 60 payments that is $17,821.20 in total, of which $2,821.20 is interest.
The 7% rate sits inside the Maryland limit in the table above, which is why it was chosen. The federal side of a loan between relatives is covered at family loan minimum interest rate and AFR rates by month.
A loan or a gift?
A loan that may never be repaid is taxed differently; see family loan vs gift, forgiving a family loan and gift tax by state.
What the documents do not say
- Section 12-103 allows the higher rate with a signed written agreement and sets conditions for the 24% tier; this page does not reproduce those conditions in full.
- Silence on a witness or notary in the sections read is not proof that no other Maryland law requires one.
Common mistakes
- Charging more than the limit in Maryland, which the table gives as 8% simple interest in writing; 24% on qualifying loans, can mean forfeiting to the borrower the greater of three times the excess interest and charges collected or $500, unless the lender cures within 30 days of signing the loan contract.
- Leaving the rate out: without a signed written agreement stating the rate, section 12-102 caps interest at 6% simple interest unless the law provides otherwise, which is rarely what the parties meant.
- Waiting too long to enforce: Maryland allows 6 years (UCC note) to sue on a written note.
Related: promissory notes by state, promissory note requirements, family loan minimum interest rate, and gift tax by state.
Sources
- Commercial Law § 12-102: https://mgaleg.maryland.gov/mgawebsite/Laws/StatuteText?article=gcl§ion=12-102&enactments=false
- Commercial Law § 12-103: https://mgaleg.maryland.gov/mgawebsite/Laws/StatuteText?article=gcl§ion=12-103&enactments=false
- Commercial Law § 12-114: https://mgaleg.maryland.gov/mgawebsite/Laws/StatuteText?article=gcl§ion=12-114&enactments=false
- Commercial Law § 3-118: https://mgaleg.maryland.gov/mgawebsite/Laws/StatuteText?article=gcl§ion=3-118&enactments=false
- Commercial Law § 3-103: https://mgaleg.maryland.gov/mgawebsite/Laws/StatuteText?article=gcl§ion=3-103&enactments=false
- Courts and Judicial Proceedings § 5-101: https://mgaleg.maryland.gov/mgawebsite/Laws/StatuteText?article=gcj§ion=5-101&enactments=false
Sources: the primary documents linked above, read on October 11, 2026. General information, not legal or tax advice. Statutes change and courts read them, so confirm anything consequential with a lawyer licensed in your state.