Updated October 12, 2026. Quick answer: 17% a year is the constitutional cap on a loan or contract not described in Sections 1 and 2 of Amendment 89 (bonds and loans made by or to governmental units, and loans by or to federally insured depository institutions), which includes a private loan between individuals (Ark. Const. Amend. 89, section 3).
Arkansas promissory note at a glance
| Item | What the documents say |
|---|---|
| Maximum interest rate on a private loan | 17% a year for loans or contracts not described in Sections 1 and 2 of the amendment (bonds and loans made by or to governmental units, and loans by or to federally insured depository institutions) |
| Rate if the note names none | Not established by the documents read |
| Penalty for charging too much | A contract above the 17% maximum is void as to principal and interest (Amendment 89, section 6(b)) |
What Arkansas law says about interest
Amendment 89 section 3 caps the lawful rate at seventeen percent per annum for loans or contracts not described in its Sections 1 and 2 (bonds and loans made by or to governmental units, and loans by or to federally insured depository institutions), which includes a private loan between individuals.
The sources in their own words
- Interest limit: “shall not exceed seventeen percent (17%) per annum” (Election Laws of Arkansas and Constitution of the State of Arkansas of 1874 (2025 Edition)).
- Interest limit: “loans or contracts not described in Sections 1 and 2” (Election Laws of Arkansas and Constitution of the State of Arkansas of 1874 (2025 Edition)).
- Interest limit: “The maximum lawful rate of interest on loans or contracts” (Election Laws of Arkansas and Constitution of the State of Arkansas of 1874 (2025 Edition)).
- Time limit to sue: “to enforce written obligations, duties or rights” (Appellate Update (March 2023)).
If you’re ready to put it in writing
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Signing the note: signature, witness, notary
None of the sections read for Arkansas 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
Arkansas Code 16-56-111(a), as quoted by the Arkansas Court of Appeals, gives five years after accrual to enforce written obligations.
A worked example: a $15,000 note
Suppose a relative lends you $15,000 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): $304.15 a month, computed here from these assumed inputs, not quoted. Over the 60 payments that is $18,249.00 in total, of which $3,249.00 is interest.
The 8% rate sits inside the Arkansas 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 rate that applies when a note names none and any exemption are not established by the documents read.
- The five-year period is read from the Arkansas Court of Appeals’ quotation of the Arkansas Code, not from the code text itself, and the signing rule was not archived.
- Silence on a witness or notary in the sections read is not proof that no other Arkansas law requires one.
Common mistakes
- Charging more than the limit in Arkansas, which the table gives as 17% a year, makes the contract void as to principal and interest (Amendment 89, section 6(b)).
- Leaving the rate out: this page cannot give Arkansas’s default rate, so write the rate down.
- Waiting too long to enforce: Arkansas allows 5 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
- Election Laws of Arkansas and Constitution of the State of Arkansas of 1874 (2025 Edition): https://www.sos.arkansas.gov/uploads/elections/Arkansas_Election_Laws_and_Constitution_2025_Edition.pdf
- Appellate Update (March 2023): https://arcourts.gov/sites/default/files/2023%20March%20Appellate%20Update.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.