Updated October 12, 2026. Quick answer: 12% a year, with a violation a crime, and 8% a year when the parties agree nothing else (CGS 37-4 and 37-1).
Connecticut promissory note at a glance
| Item | What the documents say |
|---|---|
| Maximum interest rate on a private loan | 12% a year on a loan of money; exempt under section 37-9 are loans by banks and credit unions, a bona fide mortgage of real property for more than $5,000, and nonconsumer business loans of more than $10,000, among others |
| Rate if the note names none | 8% a year |
| Penalty for charging too much | A fine of up to $1,000, up to six months in prison, or both, and no action can be brought to recover principal or interest on a prohibited loan |
What Connecticut law says about interest
Connecticut bars a person from charging or agreeing to interest above twelve per cent per annum on a loan of money, a violation that is a criminal offense.
Absent agreement to the contrary, interest on money loaned is eight per cent a year under CGS 37-1.
Section 37-9 exempts, among other loans, loans by banks and credit unions (a bank subsidiary’s loan for consumer purposes is not exempt), a bona fide mortgage of real property for more than $5,000, and nonconsumer business or investment loans of more than $10,000 (up to $250,000 only at a rate of no more than the deposit index plus 17 percent); the full list is in the statute.
The sources in their own words
- Interest limit: “interest at a rate greater than twelve per cent per annum” (Chapter 673 Interest (Connecticut General Statutes)).
- Rate when none is agreed: “be at the rate of eight per cent a year” (Chapter 673 Interest (Connecticut General Statutes)).
- Exemption or penalty: “shall be fined not more than one thousand dollars or imprisoned” (Chapter 673 Interest (Connecticut General Statutes)).
- Exemption or penalty: “No action shall be brought to recover principal or interest” (Chapter 673 Interest (Connecticut General Statutes)).
- Time limit to sue: “within six years after the right of action accrues” (Chapter 926 Statutes of Limitation (Connecticut General Statutes)).
- Time limit to sue: “within six years after the due date or dates stated” (Article 3 Negotiable Instruments (Connecticut UCC, Title 42a)).
- Signature: “unless (i) the person signed the instrument” (Article 3 Negotiable Instruments (Connecticut UCC, Title 42a)).
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 CGS 42a-3-401 a person is not liable on an instrument unless the person signed it or an agent who signed is binding on that person. A note is signed by the person who promises to pay.
None of the sections read for Connecticut 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
Connecticut gives six years to sue on a contract in writing (CGS 52-576) and six years after the due date on a note payable at a definite time under its enacted UCC 3-118.
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 Connecticut 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
- Section 37-8 bars any action to recover principal or interest on a loan prohibited by sections 37-4 to 37-6; whether a particular note is such a loan is a legal question this page does not settle.
- Silence on a witness or notary in the sections read is not proof that no other Connecticut law requires one.
Common mistakes
- Charging more than the limit in Connecticut, which the table gives as 12% a year (a violation is a crime), also means no action can be brought to recover principal or interest, or any part of either, on the prohibited loan (CGS 37-8).
- Leaving the rate out: the legal rate of 8% applies when a note names none, and it is rarely what the parties meant.
- Waiting too long to enforce: Connecticut allows 6 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
- Chapter 673 Interest (Connecticut General Statutes): https://www.cga.ct.gov/current/pub/chap_673.htm
- Chapter 926 Statutes of Limitation (Connecticut General Statutes): https://www.cga.ct.gov/current/pub/chap_926.htm
- Article 3 Negotiable Instruments (Connecticut UCC, Title 42a): https://www.cga.ct.gov/current/pub/art_003.htm
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.