Updated October 12, 2026. Quick answer: A written instrument for the payment of money may carry interest at a rate not exceeding 24% a year, and the rate is 6% a year when no contract rate is expressed (D.C. Code 28-3301 and 28-3302).
District of Columbia promissory note at a glance
| Item | What the documents say |
|---|---|
| Maximum interest rate on a private loan | 24% a year; a loan over $2,500 is outside the ceiling when the borrower is a not-for-profit corporation or the loan is made for a business, professional, commercial or investment purpose (loans secured by the borrower’s own residence are treated separately) |
| Rate if the note names none | 6% a year |
| Penalty for charging too much | A creditor who contracts in writing above the permitted rate, or verbally above 6% a year, forfeits the whole of the interest |
What District of Columbia law says about interest
The parties to a written instrument for the payment of money at a future time may contract for interest at a rate not exceeding 24% per annum.
In the absence of an expressed contract, the rate of interest on a loan is 6% per annum.
Loans over $2,500 are outside the ceiling when the borrower is a not-for-profit corporation, or when the loan is made to acquire or carry on a business, professional or commercial activity, or to acquire property as an investment or carry on an investment activity, or (for a religious society) to acquire or improve property for non-commercial, non-investment purposes; a loan secured by a mortgage or deed of trust on the borrower’s own residence is treated separately under 28-3301(d)(2). A creditor who contracts in writing above the permitted rate, or verbally for more than 6% a year, forfeits the whole of the interest (28-3303).
The sources in their own words
- Interest limit: “at a rate not exceeding 24% per annum” (D.C. Code 28-3301 Rate of interest expressed in contract).
- Rate when none is agreed: “in the absence of expressed contract, is 6% per annum” (D.C. Code 28-3302 Rate of interest not expressed and on judgments).
- Exemption or penalty: “shall not be subject to the provisions of this chapter” (D.C. Code 28-3301 Rate of interest expressed in contract).
- Exemption or penalty: “the creditor shall forfeit the whole of the interest” (D.C. Code 28-3303 Usury defined).
- Time limit to sue: “must be commenced within 6 years after the due date” (D.C. Code 28:3-118 Statute of limitations).
- Time limit to sue: “on a simple contract, express or implied” (D.C. Code 12-301 Limitation of time for bringing actions).
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Signing the note: signature, witness, notary
Under D.C. Code 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 District of Columbia 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
The District gives six years after the due date to sue on a note payable at a definite time (D.C. Code 28:3-118), and three years on a simple contract, express or implied (D.C. Code 12-301).
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 District of Columbia 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
- Which of the two time limits governs a particular note is a legal question the documents read do not settle.
- The quoted text of the District’s code carries encoding errors in places; only the readable passages are quoted.
- Silence on a witness or notary in the sections read is not proof that no other District of Columbia law requires one.
Common mistakes
- Charging more than the limit in the District of Columbia, which the table gives as 24% a year (a loan over $2,500 for a business, professional, commercial or investment purpose, or to a not-for-profit corporation, is outside the ceiling), makes the creditor forfeit the whole of the interest contracted for; so does a verbal contract above 6% (D.C. Code 28-3303).
- Leaving the rate out: the legal rate of 6% applies when a note names none, and it is rarely what the parties meant.
- Waiting too long to enforce: District of Columbia allows 6 years (note); 3 years (simple 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
- D.C. Code 28-3301 Rate of interest expressed in contract: https://code.dccouncil.gov/us/dc/council/code/sections/28-3301
- D.C. Code 28-3302 Rate of interest not expressed and on judgments: https://code.dccouncil.gov/us/dc/council/code/sections/28-3302
- D.C. Code 28-3303 Usury defined: https://code.dccouncil.gov/us/dc/council/code/sections/28-3303
- D.C. Code 28:3-118 Statute of limitations: https://code.dccouncil.gov/us/dc/council/code/sections/28:3-118
- D.C. Code 12-301 Limitation of time for bringing actions: https://code.dccouncil.gov/us/dc/council/code/sections/12-301
- D.C. Code 28:3-401 Signature necessary for liability on instrument: https://code.dccouncil.gov/us/dc/council/code/sections/28:3-401
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.