Updated October 11, 2026. Quick answer: Massachusetts lets the parties agree any written rate, but charging more than 20% a year is criminal usury, and 6% a year applies when no rate is agreed (M.G.L. c.107 section 3 and c.271 section 49).
Massachusetts promissory note at a glance
| Item | What the documents say |
|---|---|
| Maximum interest rate on a private loan | Any agreed rate in writing (except as c.140 ss.78, 90, 92, 96 and 100 provide); criminal usury where interest and expenses exceed 20% a year, unless the lender has notified the attorney general or the loan or lender is regulated under other law |
| Rate if the note names none | 6% a year ($6 on each hundred for a year) |
| Penalty for charging too much | A loan above 20% may be declared void by the supreme judicial or superior court in equity on the borrower’s petition, and knowingly charging it is criminal usury punishable by up to ten years in state prison or a fine up to $10,000, or both |
What Massachusetts law says about interest
Chapter 107 section 3, except as sections 78, 90, 92, 96 and 100 of chapter 140 provide, makes it lawful to contract for any rate of interest (but a rate above six percent is recoverable in suit only if the agreement is in writing), while the criminal usury statute reaches interest and expenses above twenty percent per annum.
With no agreement or provision of law for a different rate, interest is six dollars on each hundred for a year.
A loan above 20 percent may be declared void by the supreme judicial or superior court on the borrower’s petition and is a crime; the criminal section does not apply to a lender who notifies the attorney general, or to loans or lenders regulated under other law.
The sources in their own words
- Interest limit: “except as provided in sections seventy-eight, ninety, ninety-two, ninety-six and one hundred of chapter one hundred and forty, it shall be lawful to pay, reserve or contract for any rate of interest or discount” (M.G.L. c.107 s.3 Rate of interest).
- Rate when none is agreed: “at the rate of six dollars on each hundred for a year” (M.G.L. c.107 s.3 Rate of interest).
- Interest limit: “unless the agreement to pay it is in writing” (M.G.L. c.107 s.3 Rate of interest).
- Interest limit: “exceeds an amount greater than twenty per centum per annum” (M.G.L. c.271 s.49 Criminal usury).
- Exemption or penalty: “may be declared void by the supreme judicial or superior court” (M.G.L. c.271 s.49 Criminal usury).
- Time limit to sue: “within six years after the due date or dates stated” (M.G.L. c.106 s.3-118 Statute of Limitations).
- Signature: “written undertaking to pay money signed by the person undertaking to pay” (M.G.L. c.106 s.3-103 Definitions).
If you’re ready to put it in writing
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Signing the note: signature, witness, notary
Massachusetts’ enacted 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 Massachusetts 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
An action to enforce a note payable at a definite time must be commenced within six years after the due date, and contract actions generally within six years after the cause of action accrues.
A worked example: a $20,000 note
Suppose a relative lends you $20,000 and you sign a note for 5 years at 7% a year, paid monthly. With r = 7%/12 and n = 60 months, the level payment is principal times r divided by (1 minus (1 + r) to the power of negative n): $396.02 a month, computed here from these assumed inputs, not quoted. Over the 60 payments that is $23,761.20 in total, of which $3,761.20 is interest.
The 7% rate is an assumed figure for the illustration, not a recommended or typical one; the Massachusetts rules above decide what a lender may charge. 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 statutes read set a criminal line at 20% rather than a civil cap, so what a court would allow between 6% and 20% 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 Massachusetts law requires one.
Common mistakes
- Charging more than the limit in Massachusetts, which the table gives as any written rate with criminal usury above 20% a year (interest and expenses), is a crime punishable by up to ten years in state prison or a fine up to $10,000, or both, and the loan may be declared void by the supreme judicial or superior court in equity on the borrower’s petition (c.271 s.49).
- 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: Massachusetts 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
- M.G.L. c.107 s.3 Rate of interest: https://malegislature.gov/Laws/GeneralLaws/PartI/TitleXV/Chapter107/Section3
- M.G.L. c.271 s.49 Criminal usury: https://malegislature.gov/Laws/GeneralLaws/PartIV/TitleI/Chapter271/Section49
- M.G.L. c.106 s.3-118 Statute of Limitations: https://malegislature.gov/Laws/GeneralLaws/PartI/TitleXV/Chapter106/Section3-118
- M.G.L. c.106 s.3-103 Definitions: https://malegislature.gov/Laws/GeneralLaws/PartI/TitleXV/Chapter106/Section3-103
Sources: the primary documents linked above, read on October 11, 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.