Updated October 12, 2026. Quick answer: The parties to a loan of money may agree upon any rate of interest, and 10% a year is the legal rate unless they specify another (Utah Code 15-1-1).
Utah promissory note at a glance
| Item | What the documents say |
|---|---|
| Maximum interest rate on a private loan | No general cap: the parties may agree upon any rate of interest for the contract |
| Rate if the note names none | 10% a year |
| Penalty for charging too much | Not established by the documents read |
What Utah law says about interest
Utah lets the parties to a lawful written, verbal, or implied contract, including a loan of money, agree upon any rate of interest.
Unless the parties expressly specify a different rate, the legal rate of interest is 10% per annum.
The sources in their own words
- Interest limit: “may agree upon any rate of interest for the contract” (Utah Code Title 15 Chapter 1 Interest).
- Rate when none is agreed: “claim for breach of contract is 10% per annum” (Utah Code Title 15 Chapter 1 Interest).
- Time limit to sue: “An action may be brought within six years” (Utah Code Title 78B Chapter 2 Statutes of Limitations).
- Time limit to sue: “upon any contract, obligation, or liability founded upon an instrument in writing” (Utah Code Title 78B Chapter 2 Statutes of Limitations).
- Time limit to sue: “must be commenced within six years after the due date or dates” (Utah Code Title 70A Chapter 3 Negotiable Instruments).
- Signature: “A person is not liable on an instrument unless:” (Utah Code Title 70A Chapter 3 Negotiable Instruments).
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Signing the note: signature, witness, notary
Under Utah Code 70A-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 Utah 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
Utah gives six years to sue on a note payable at a definite time under its enacted UCC 3-118, and six years on a contract founded on a written instrument.
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 Utah 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
- No penalty or usury ceiling for a private note appears in the section read, and Utah’s criminal usury provisions were not read.
- Silence on a witness or notary in the sections read is not proof that no other Utah law requires one.
Common mistakes
- Assuming that no stated cap means no rule: the Utah table above gives the limit as Any rate the parties agree, and the page lists what the documents do not say.
- Leaving the rate out: the legal rate of 10% applies when a note names none, and it is rarely what the parties meant.
- Waiting too long to enforce: Utah 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
- Utah Code Title 15 Chapter 1 Interest: https://le.utah.gov/xcode/Title15/Chapter1/C15-1_1800010118000101.pdf
- Utah Code Title 78B Chapter 2 Statutes of Limitations: https://le.utah.gov/xcode/Title78B/Chapter2/C78B-2_1800010118000101.pdf
- Utah Code Title 70A Chapter 3 Negotiable Instruments: https://le.utah.gov/xcode/Title70A/Chapter3/C70A-3_1800010118000101.pdf
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.