Updated October 12, 2026. Quick answer: A lender may charge any rate agreed in writing up to 5% over the Federal Reserve discount rate, with no limit on a loan above $100,000 that is not secured by a mortgage on the borrower’s principal residence (6 Del. C. 2301).
Delaware promissory note at a glance
| Item | What the documents say |
|---|---|
| Maximum interest rate on a private loan | Any rate agreed in writing up to 5% over the Federal Reserve discount rate; no limit on a loan above $100,000 not secured by a mortgage on the borrower’s principal residence |
| Rate if the note names none | 5% over the Federal Reserve discount rate (no fixed figure) |
| Penalty for charging too much | A borrower need not pay interest above the lawful rate and may deduct it from the debt; a borrower who has paid the whole debt with excess interest may recover 3 times the excess interest or $500, whichever is greater, if suing within 1 year of that payment |
What Delaware law says about interest
Delaware lets a lender charge any rate agreed in writing up to 5% over the Federal Reserve discount rate, a floating ceiling rather than a fixed percent.
Where no contract rate is expressed, the legal rate is 5% over the Federal Reserve discount rate including any surcharge.
There is no limit on the rate for a loan above $100,000 whose repayment is not secured by a mortgage against the principal residence of any borrower; a borrower need not pay the excess over the lawful rate, and a borrower who has paid the whole debt with excess interest may recover 3 times the excess interest or $500, whichever is greater, by suing within 1 year after that payment (6 Del. C. 2304). Criminal usury was not read.
The sources in their own words
- Interest limit: “any rate agreed upon in writing not in excess of 5% over” (Delaware Code Title 6 Chapter 23 Interest).
- Rate when none is agreed: “the legal rate of interest shall be 5% over the Federal Reserve” (Delaware Code Title 6 Chapter 23 Interest).
- Exemption or penalty: “there shall be no limitation on the rate of interest which may be legally charged for the loan or use of money, where the amount of money loaned or used exceeds $100,000, and where repayment thereof is not secured by a mortgage against the principal residence of any borrower” (Delaware Code Title 6 Chapter 23 Interest).
- Exemption or penalty: “3 times the amount of interest collected on any loan in excess” (Delaware Code Title 6 Chapter 23 Interest).
- Time limit to sue: “must be commenced within six years after the due date or dates” (Delaware Code Title 6 Article 3 Negotiable Instruments).
- Time limit to sue: “no action based on a promise, no action based on a statute” (Delaware Code Title 10 Chapter 81 Limitation of Actions).
- Signature: “written undertaking to pay money signed by the person undertaking to pay” (Delaware Code Title 6 Article 3 Negotiable Instruments).
If you’re ready to put it in writing
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Signing the note: signature, witness, notary
Under 6 Del. C. 3-103 a promise is 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 Delaware 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
Delaware gives six years after the due date to sue on a note payable at a definite time (6 Del. C. 3-118), and 3 years on an action based on a promise (10 Del. C. 8106).
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 Delaware 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 Federal Reserve discount rate changes, so this page gives the formula and not a current figure.
- The archived chapter did not include the section on who is liable on an instrument, so the signing line rests on the definition of a promise.
- Silence on a witness or notary in the sections read is not proof that no other Delaware law requires one.
Common mistakes
- Charging more than the lawful rate in Delaware (up to 5% over the Fed discount rate in writing; no limit on a loan above $100,000 not secured by a mortgage on the principal residence of any borrower) means the borrower need not pay the excess and, after paying the whole debt, may recover 3 times the excess or $500, whichever is greater, if suing within 1 year after payment.
- Leaving the rate out: the legal rate of 5% over the Fed discount rate applies when a note names none, and it is rarely what the parties meant.
- Waiting too long to enforce: Delaware allows 6 years to sue on a promissory note (10 Del. C. 8109).
Related: promissory notes by state, promissory note requirements, family loan minimum interest rate, and gift tax by state.
Sources
- Delaware Code Title 6 Chapter 23 Interest: https://delcode.delaware.gov/title6/c023/index.html
- Delaware Code Title 6 Article 3 Negotiable Instruments: https://delcode.delaware.gov/title6/c003/sc01/index.html
- Delaware Code Title 10 Chapter 81 Limitation of Actions: https://delcode.delaware.gov/title10/c081/index.html
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.