Updated October 12, 2026. Quick answer: 6% a year unless the parties agree otherwise in a written contract, which may by express agreement charge any rate, and eight and three-fourths percent a year is the legal rate where interest is due by law with no rate agreed (S.C. Code 37-10-106 and 34-31-20).
South Carolina promissory note at a glance
| Item | What the documents say |
|---|---|
| Maximum interest rate on a private loan | No fixed ceiling for a written contract, which may by express agreement charge any rate, except as otherwise provided in Title 37 or by law; without one, no more than 6% a year |
| Rate if the note names none | Eight and three-fourths percent a year where interest is due by law (section 34-31-20) |
| Penalty for charging too much | Section 37-10-105 gives the debtor actual damages plus a court-set penalty of $1,500 to $7,500 when a creditor violates the chapter |
What South Carolina law says about interest
South Carolina limits interest to six percent a year unless the parties agree in a written contract, and a written contract may by express agreement charge any rate of interest.
Where a sum is ascertained and due and draws interest according to law but no rate is agreed (including accounts stated), the legal rate under section 34-31-20(A) is eight and three-fourths percent per annum; a money decree or judgment instead draws the Wall Street Journal prime rate plus four percentage points, compounded annually (34-31-20(B)); the Consumer Protection Code points to that section for the meaning of legal rate.
The sources in their own words
- Interest limit: “No greater interest than six percent per annum shall be charged” (Section 37-10-106 Maximum rate of interest; legal rate of interest).
- Exemption or penalty: “by express agreement, any rate of interest may be charged” (Section 37-10-106 Maximum rate of interest; legal rate of interest).
- Rate when none is agreed: “eight and three-fourths percent per annum” (Section 34-31-20 Legal rate of interest).
- Exemption or penalty: “contract for the payment by the debtor of any loan finance charge” (Title 37 Chapter 3 Loans (37-3-104, 37-3-605)).
- Time limit to sue: “an action upon a contract, obligation, or liability, express or implied” (Section 15-3-530 Three years).
- Time limit to sue: “must be commenced within six years after the due date or dates” (Title 36 Chapter 3 Negotiable Instruments (36-3-118, 36-3-401)).
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Signing the note: signature, witness, notary
Under South Carolina’s UCC 3-401 a person is not liable on an instrument unless the person signed it or an agent signed for them, and a signature may be a word, mark or symbol adopted with present intention to authenticate a writing. A note is signed by the person who promises to pay.
None of the sections read for South Carolina 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
South Carolina gives six years after the due date to sue on a note payable at a definite time (S.C. Code 36-3-118), and three years on a contract action generally (15-3-530).
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 is an assumed figure for the illustration, not a recommended or typical one; the South Carolina rules above decide what a lender may charge. 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 37-10-105 sets the remedy for a violation of the chapter (actual damages and a penalty of $1,500 to $7,500, with a bona fide error defense); whether it reaches a one-off private loan between individuals is not settled by the documents read.
- Which of the two time limits governs a particular note is a legal question the documents read do not settle.
- Silence on a witness or notary in the sections read is not proof that no other South Carolina law requires one.
Common mistakes
- Assuming that no stated cap means no rule: the South Carolina table above gives the limit as Any rate by express written agreement; 6% otherwise, and the page lists what the documents do not say.
- Leaving the rate out: where a sum is ascertained and due and draws interest according to law, the legal rate is eight and three-fourths percent a year (a judgment draws prime plus four points), and it is rarely what the parties meant.
- Waiting too long to enforce: South Carolina allows 6 years (note); 3 years (contract) 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
- Section 37-10-106 Maximum rate of interest; legal rate of interest: https://www.scstatehouse.gov/code/t37c010.php
- Section 34-31-20 Legal rate of interest: https://www.scstatehouse.gov/code/t34c031.php
- Title 37 Chapter 3 Loans (37-3-104, 37-3-605): https://www.scstatehouse.gov/code/t37c003.php
- Section 15-3-530 Three years: https://www.scstatehouse.gov/code/t15c003.php
- Title 36 Chapter 3 Negotiable Instruments (36-3-118, 36-3-401): https://www.scstatehouse.gov/code/t36c003.php
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.