Updated October 12, 2026. Quick answer: 12% a year conventional interest, fixed in writing, with loans for commercial or business purposes outside the cap (La. R.S. 9:3500).
Louisiana promissory note at a glance
| Item | What the documents say |
|---|---|
| Maximum interest rate on a private loan | 12% a year; the rate must be fixed in writing; loans for commercial or business purposes are outside the cap |
| Rate if the note names none | Not established by the documents read; judicial interest at the rate fixed in R.S. 13:4202 applies only to sums that are the object of a judicial demand |
| Penalty for charging too much | A person who paid more than the cap may sue to recover it within two years of payment |
What Louisiana law says about interest
Louisiana caps conventional interest at twelve percent per annum, and the rate must be fixed in writing because testimonial proof of it is not admitted.
The article does not apply to a loan made for commercial or business purposes; a person who pays a higher rate than the cap may sue to recover it within two years of payment, and, except for a consumer credit transaction under the Louisiana Consumer Credit Law, a note owner may collect the whole note but the obligation bears no more than twelve percent after maturity.
The sources in their own words
- Interest limit: “The amount of the conventional interest cannot exceed twelve percent per annum” (RS 9:3500 Rates of legal and conventional interest; usury).
- Interest limit: “The same must be fixed in writing” (RS 9:3500 Rates of legal and conventional interest; usury).
- Judicial interest: “At the rate fixed in R.S. 13:4202 on all sums which are the object of a judicial demand” (RS 9:3500 Rates of legal and conventional interest; usury).
- Exemption or penalty: “shall not apply to a loan made for commercial or business purposes” (RS 9:3500 Rates of legal and conventional interest; usury).
- Time limit to sue: “are subject to a liberative prescription of five years” (Civil Code Art. 3498 Actions on negotiable and nonnegotiable instruments).
- Time limit to sue: “within five years after the due date or dates” (RS 10:3-118 Prescription).
If you’re ready to put it in writing
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Signing the note: signature, witness, notary
Under Louisiana’s UCC 3-401 a person is not liable on an instrument unless the person signed it or an agent signed for them. A note is signed by the person who promises to pay.
None of the sections read for Louisiana 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
Louisiana gives five years to sue on a promissory note, running from the day payment is exigible, and its enacted UCC 3-118 also says five years after the due date for a note payable at a definite time.
A worked example: a $15,000 note
Suppose a relative lends you $15,000 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): $304.15 a month, computed here from these assumed inputs, not quoted. Over the 60 payments that is $18,249.00 in total, of which $3,249.00 is interest.
The 8% rate sits inside the Louisiana 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 sections read state no rate for a note that names none; the percentage that R.S. 13:4202 fixes (judicial interest on sums that are the object of a judicial demand) is not stated in them.
- Silence on a witness or notary in the sections read is not proof that no other Louisiana law requires one.
Common mistakes
- Charging more than 12% in Louisiana (rate fixed in writing; business loans outside) lets the person who paid the higher rate sue to recover it within two years of payment.
- Leaving the rate out: this page cannot give Louisiana’s default rate, so write the rate down.
- Waiting too long to enforce: Louisiana allows 5 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
- RS 9:3500 Rates of legal and conventional interest; usury: https://legis.la.gov/legis/LawPrint.aspx?d=285199
- Civil Code Art. 3498 Actions on negotiable and nonnegotiable instruments: https://legis.la.gov/legis/LawPrint.aspx?d=110524
- RS 10:3-118 Prescription: https://legis.la.gov/legis/LawPrint.aspx?d=74142
- RS 10:3-401 Signature necessary for liability on instrument: https://legis.la.gov/legis/LawPrint.aspx?d=74163
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.