Updated October 12, 2026. Quick answer: An agreed rate may not exceed the greater of 10 percent or five percentage points over the 12th Federal Reserve District advance rate, loans over $25,000 are exempt, and the legal rate is 10.5 percent a year on money after it is due (AS 45.45.010).
Alaska promissory note at a glance
| Item | What the documents say |
|---|---|
| Maximum interest rate on a private loan | The greater of 10 percent or five percentage points over the 12th Federal Reserve District member-bank advance rate; a loan over $25,000 is exempt |
| Rate if the note names none | 10.5% a year after the money is due |
| Penalty for charging too much | An excessive rate forfeits the entire interest on the debt; a borrower who paid the excess can sue within two years of the payment to recover double the interest collected |
What Alaska law says about interest
Alaska bars an agreed interest rate above the greater of 10 percent or five percentage points over the 12th Federal Reserve District member-bank advance rate on the day the contract is made.
The rate of interest in Alaska is 10.5 percent a year on money after it is due, except where the agreed-rate limit applies.
A contract or loan commitment with a principal amount over $25,000 is exempt from the agreed-rate limit; an excessive rate forfeits the entire interest on the debt (AS 45.45.040). A borrower who paid interest above the limit may also sue, within two years after the payment, to recover double the amount of interest received or collected (AS 45.45.030). Criminal usury was not read.
The sources in their own words
- Interest limit: “more than the greater of 10 percent or five percentage points above” (Alaska Statutes Sec. 45.45.010 Legal rate of interest).
- Rate when none is agreed: “The rate of interest in the state is 10.5 percent a year” (Alaska Statutes Sec. 45.45.010 Legal rate of interest).
- Exemption or penalty: “principal amount exceeds $25,000 is exempt from the limitation of this subsection” (Alaska Statutes Sec. 45.45.010 Legal rate of interest).
- Exemption or penalty: “works a forfeiture of the entire interest on the debt” (Alaska Statutes Sec. 45.45.020-45.45.100 Interest).
- Exemption or penalty: “recover from the person receiving the payment double the amount of the interest” (Alaska Statutes Sec. 45.45.020-45.45.100 Interest).
- Time limit to sue: “must be commenced within six years after the due date or dates” (Alaska Statutes Sec. 45.03.118 Statute of limitations).
- Time limit to sue: “Unless the action is commenced within three years” (Alaska Statutes Sec. 09.10.040-09.10.060 Limitation of actions).
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Signing the note: signature, witness, notary
Under AS 45.03.401 a person is not liable on an instrument unless the person (or an authorized agent) signed it. A note is signed by the person who promises to pay.
None of the sections read for Alaska 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
Alaska gives six years after the due date to sue on a note payable at a definite time (AS 45.03.118), and three years on contract actions generally (AS 09.10.053).
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 Alaska 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 advance rate changes, so this page gives the formula and not a current dollar figure for the ceiling.
- 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 Alaska law requires one.
Common mistakes
- Charging more than the limit in Alaska, which the table gives as the greater of 10 percent or 5 points over the Fed advance rate (loans over $25,000 exempt), works a forfeiture of the entire interest on the debt if a court finds the rate usurious (AS 45.45.040).
- Leaving the rate out: Alaska’s 10.5% a year legal rate applies to money after it is due, and it is rarely what the parties meant.
- Waiting too long to enforce: Alaska allows 6 years (note); 3 years (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
- Alaska Statutes Sec. 45.45.010 Legal rate of interest: https://www.akleg.gov/basis/statutes.asp#45.45.010
- Alaska Statutes Sec. 45.45.020-45.45.100 Interest: https://www.akleg.gov/basis/statutes.asp#45.45.020
- Alaska Statutes Sec. 45.03.118 Statute of limitations: https://www.akleg.gov/basis/statutes.asp#45.03.118
- Alaska Statutes Sec. 09.10.040-09.10.060 Limitation of actions: https://www.akleg.gov/basis/statutes.asp#09.10.040
- Alaska Statutes Sec. 45.03.401 Signature: https://www.akleg.gov/basis/statutes.asp#45.03.401
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.