Updated October 12, 2026. Quick answer: 12% a year is the legal rate when no express written contract fixes a different rate; the section read states no maximum for a rate agreed in writing (Idaho Code 28-22-104).
Idaho promissory note at a glance
| Item | What the documents say |
|---|---|
| Maximum interest rate on a private loan | No maximum is stated in the section read; it contemplates an express written contract fixing a different rate |
| Rate if the note names none | 12% a year (twelve cents on the hundred by the year) |
| Penalty for charging too much | Not established by the documents read |
What Idaho law says about interest
When no express written contract fixes a different rate, interest is twelve cents on the hundred by the year on money lent or due by express contract.
The sources in their own words
- Rate when none is agreed: “no express contract in writing fixing a different rate of interest” (Section 28-22-104: Idaho State Legislature).
- Rate when none is agreed: “twelve cents (12¢) on the hundred by the year” (Section 28-22-104: Idaho State Legislature).
- Time limit to sue: “must be commenced within six (6) years after the due date” (Section 28-3-118: Idaho State Legislature).
- Time limit to sue: “Action on written contract. Within five (5) years” (Section 5-216: Idaho State Legislature).
If you’re ready to put it in writing
This is free to browse and there is no obligation to buy anything. LawDepot builds a state-specific promissory note through a question-and-answer form.
Build a promissory note at LawDepot
LawDepot pays us a commission if you buy through this link. It costs you nothing extra. We are not a law firm and this is not legal advice. Affiliate Disclosure.
Signing the note: signature, witness, notary
Under Idaho’s UCC 28-3-401 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 Idaho 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
Idaho gives six years after the due date to sue on a note payable at a definite time (Idaho Code 28-3-118), and five years on a written contract generally (5-216).
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 Idaho 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
- Sections 28-22-101 through 28-22-103 could not be archived, so any exemption or penalty is not established.
- 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 Idaho law requires one.
Common mistakes
- Assuming that no stated cap means no rule: the Idaho table above gives the limit as No maximum stated in the section read; a written rate controls, and the page lists what the documents do not say.
- Leaving the rate out: the legal rate of 12% applies when a note names none, and it is rarely what the parties meant.
- Waiting too long to enforce: Idaho allows 6 years (note); 5 years (written 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 28-22-104: Idaho State Legislature: https://legislature.idaho.gov/statutesrules/idstat/Title28/T28CH22/SECT28-22-104/
- Section 28-3-118: Idaho State Legislature: https://legislature.idaho.gov/statutesrules/idstat/Title28/T28CH3/SECT28-3-118/
- Section 5-216: Idaho State Legislature: https://legislature.idaho.gov/statutesrules/idstat/Title5/T5CH2/SECT5-216/
- Section 28-3-401: Idaho State Legislature: https://legislature.idaho.gov/statutesrules/idstat/Title28/T28CH3/SECT28-3-401/
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.