Updated October 12, 2026. Quick answer: Up to 16% a year when a written contract specifies the rate (6% otherwise), loans of $50,000 or more are exempt (except first-lien loans on one-to-six-unit dwellings), and a rate above 30% a year is criminal usury, or above 50% a year when the borrower is a corporation, LLC or LLP (N.J.S.A. 31:1-1 and 2C:21-19).
New Jersey promissory note at a glance
| Item | What the documents say |
|---|---|
| Maximum interest rate on a private loan | 16% a year when a written contract specifies the rate; loans of $50,000 or more are exempt except first-lien loans on one-to-six-unit dwellings; criminal usury above 30% a year (above 50% a year for a corporation, LLC or LLP borrower) |
| Rate if the note names none | Not established as a default rate; without a written rate the civil limit is 6% a year |
| Penalty for charging too much | In an action to enforce the note where a higher rate than the law allows was reserved or taken, the lender may recover only the amount actually lent, without interest or costs of the action, and any illegal interest already paid is deducted from the recovery |
What New Jersey law says about interest
Civil limit is $6 per $100 per year, or $16 per $100 per year when a written contract specifies the rate; loans of $50,000 or more, other than first-lien loans on one-to-six-unit dwellings, are exempt from that limit, while criminal usury treats rates above 30 percent per annum as unauthorized.
Loans of $50,000.00 or more may carry any agreed rate (except first-lien loans on one-to-six-unit dwellings); in an action to enforce a note on which a higher-than-lawful rate was reserved or taken, the lender may recover only the amount actually lent, without interest or costs of the action, less any illegal interest already paid; corporations may not plead usury; criminal usury applies above 30 percent per annum (50 percent for corporate borrowers).
The sources in their own words
- Interest limit: “above the value of $16.00 for the forbearance of $100.00” (New Jersey Statutes (plain text excerpts: 2A:14-1, 31:1-1, 31:1-3, 2C:21-19, 12A:3-103, 12A:3-118, 25:1-5)).
- Interest limit: “when there is a written contract specifying a rate of interest” (New Jersey Statutes (plain text excerpts: 2A:14-1, 31:1-1, 31:1-3, 2C:21-19, 12A:3-103, 12A:3-118, 25:1-5)).
- Exemption or penalty: “Loans in the amount of $50,000.00 or more, except loans where the security given is a first lien on real property on which there is erected or to be erected a structure containing one, two, three, four, five or six dwelling units” (New Jersey Statutes (plain text excerpts: 2A:14-1, 31:1-1, 31:1-3, 2C:21-19, 12A:3-103, 12A:3-118, 25:1-5)).
- Exemption or penalty: “interest rate which exceeds 30% per annum” (New Jersey Statutes (plain text excerpts: 2A:14-1, 31:1-1, 31:1-3, 2C:21-19, 12A:3-103, 12A:3-118, 25:1-5)).
- Exemption or penalty: “the amount or value actually lent, without interest” (New Jersey Statutes (plain text excerpts: 2A:14-1, 31:1-1, 31:1-3, 2C:21-19, 12A:3-103, 12A:3-118, 25:1-5)).
- Signature: “written undertaking to pay money signed by the person undertaking to pay” (New Jersey Statutes (plain text excerpts: 2A:14-1, 31:1-1, 31:1-3, 2C:21-19, 12A:3-103, 12A:3-118, 25:1-5)).
- Time limit to sue: “the statute of limitations for a contract action is 6 years” (What is the statute of limitations for the claim in my case?).
- Criminal usury line: “50% for corporations and 30% for non-corporate borrowers” (NJDOBI Banking FAQ: criminal and civil usury rates in New Jersey).
If you’re ready to put it in writing
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Signing the note: signature, witness, notary
New Jersey’s enacted UCC 3-103 defines a promise as a written undertaking to pay money signed by the person undertaking to pay. A note is signed by the person who promises to pay.
None of the sections read for New Jersey 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
A contractual claim not under seal must be commenced within six years after the cause of action accrues, and a note payable at a definite time within six years after its due date.
A worked example: a $20,000 note
Suppose a relative lends you $20,000 and you sign a note for 5 years at 8% a year, paid monthly. With r = 8%/12 and n = 60 months, the level payment is principal times r divided by (1 minus (1 + r) to the power of negative n): $405.53 a month, computed here from these assumed inputs, not quoted. Over the 60 payments that is $24,331.80 in total, of which $4,331.80 is interest.
The 8% rate sits inside the New Jersey 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
- The rate that applies when a note names none is not stated in the sections read, only the civil limit of 6% a year without a written contract.
- The exemption for first-lien loans on one-to-six-unit dwellings and the corporate-borrower rules are not reproduced in full.
- Silence on a witness or notary in the sections read is not proof that no other New Jersey law requires one.
Common mistakes
- Charging more than the limit in New Jersey, which the table gives as 16% in writing (6% otherwise); loans of $50,000 or more exempt unless secured by a first lien on a one-to-six-unit dwelling, can leave the lender able to recover only the amount actually lent, without interest, in an action to enforce the note (31:1-3).
- Leaving the rate out: this page cannot give New Jersey’s default rate, so write the rate down.
- Waiting too long to enforce: New Jersey allows 6 years 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
- New Jersey Statutes (plain text excerpts: 2A:14-1, 31:1-1, 31:1-3, 2C:21-19, 12A:3-103, 12A:3-118, 25:1-5): https://pub.njleg.gov/statutes/STATUTES-TEXT.zip
- What is the statute of limitations for the claim in my case?: https://www.njcourts.gov/faq/what-statute-limitations-claim-my-case
- NJDOBI Banking FAQ: criminal and civil usury rates in New Jersey: https://www.nj.gov/dobi/division_consumers/finance/bankfaqs.htm
Sources: the primary documents linked above, read on October 12, 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.