Updated October 12, 2026. Quick answer: Up to 12% a year on consumer credit and on a home business loan, any rate not otherwise prohibited by law for a written contract that is not consumer credit, a home business loan or a credit card agreement, and 10% a year when no rate is agreed (HRS 478-2 and 478-4).
Hawaii promissory note at a glance
| Item | What the documents say |
|---|---|
| Maximum interest rate on a private loan | 12% a year simple interest on consumer credit (credit to a natural person primarily for a personal, family or household purpose that is up to $250,000 or is secured by real property or the principal dwelling) and on a home business loan, but 24% a year where the creditor is a financial institution regulated under chapter 412 (other than a trust company or credit union); any rate not otherwise prohibited by law in a written contract that is not consumer credit, a home business loan or a credit card agreement |
| Rate if the note names none | 10% a year on money due on a promissory note after it becomes due, when no express written contract fixes a different rate |
| Penalty for charging too much | Not established by the documents read |
What Hawaii law says about interest
When there is no express written contract fixing a different rate, interest is allowed at ten per cent a year on money due on a promissory note after it becomes due.
The sources in their own words
- Interest limit: “not exceeding one per cent per month or twelve per cent” (Section 478-4 Rate by written contract).
- Interest limit: “With respect to any transaction other than a consumer credit transaction, a home business loan, or a credit card agreement, it shall be lawful to stipulate by written contract for any rate of interest not otherwise prohibited by law” (Section 478-4 Rate by written contract).
- Rate when none is agreed: “interest shall be allowed at the rate of ten per cent” (Section 478-2 Legal rate; computation).
- Exemption or penalty: “primarily for a personal, family, or household purpose” (Section 478-1 Definitions).
- Time limit to sue: “must be commenced within six years after the due date or dates” (Section 490:3-118 Statute of limitations).
- Time limit to sue: “commenced within six years next after the cause of action accrued” (Section 657-1 Six years).
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Signing the note: signature, witness, notary
Under Hawaii’s UCC 3-401 a person is not liable on an instrument unless the person signed it or an agent who signed binds them; UCC 3-103 defines a promise as 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 Hawaii 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
Hawaii’s enacted UCC 3-118 gives six years after the due date to sue on a note payable at a definite time, and HRS 657-1 gives six years for actions to recover a debt founded on a contract.
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 Hawaii 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
- Whether a particular family loan is consumer credit is not settled by the documents read, so the 12% line may or may not apply to it.
- Section 478-8 exempts certain first-mortgage and purchase-money mortgage loans; the details are not reproduced here.
- Silence on a witness or notary in the sections read is not proof that no other Hawaii law requires one.
Common mistakes
- Charging more than the limit in Hawaii, which the table gives as 12% on consumer credit and home business loans (any lawful written rate otherwise): the sections read state no penalty, so this page does not say what a violation costs the lender.
- Leaving the rate out: with no express written contract fixing a rate, Hawaii allows 10% a year on money due on a note after it becomes due (478-2), and it is rarely what the parties meant.
- Waiting too long to enforce: Hawaii 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
- Section 478-4 Rate by written contract: https://www.capitol.hawaii.gov/hrscurrent/Vol11_Ch0476-0490/HRS0478/HRS_0478-0004.htm
- Section 478-2 Legal rate; computation: https://www.capitol.hawaii.gov/hrscurrent/Vol11_Ch0476-0490/HRS0478/HRS_0478-0002.htm
- Section 478-1 Definitions: https://www.capitol.hawaii.gov/hrscurrent/Vol11_Ch0476-0490/HRS0478/HRS_0478-0001.htm
- Section 490:3-118 Statute of limitations: https://www.capitol.hawaii.gov/hrscurrent/Vol11_Ch0476-0490/HRS0490/HRS_0490-0003-0118.htm
- Section 657-1 Six years: https://www.capitol.hawaii.gov/hrscurrent/Vol13_Ch0601-0676/HRS0657/HRS_0657-0001.htm
- Section 490:3-401 Signature necessary for liability on instrument: https://www.capitol.hawaii.gov/hrscurrent/Vol11_Ch0476-0490/HRS0490/HRS_0490-0003-0401.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.