Updated October 11, 2026. Quick answer: Wisconsin’s old $12 per $100 ceiling in section 138.05 does not apply to loans made on or after November 1, 1981, and a rate above the 5% legal rate must be clearly expressed in writing (Wis. Stat. 138.04 and 138.05).
Wisconsin promissory note at a glance
| Item | What the documents say |
|---|---|
| Maximum interest rate on a private loan | No ceiling under section 138.05 for loans made on or after November 1, 1981 (except penalty or late-charge-only forbearances for personal, family or household purposes); a rate above the legal rate must be clearly in writing and not exceed the rate allowed in the sections section 138.04 lists |
| Rate if the note names none | 5% a year ($5 upon $100 for one year) |
| Penalty for charging too much | Section 138.06, the usury penalty section, does not apply to a loan or forbearance made on or after November 1, 1981 (138.06(8)) |
What Wisconsin law says about interest
Wis. Stat. 138.05(1)(a) sets a $12 per $100 per year ceiling, but 138.05(8)(c) says that section does not apply to loans made on or after November 1, 1981 (except penalty or late-charge-only forbearances for personal, family or household purposes), and 138.04 lets parties contract for a rate not exceeding the rate allowed in the sections it lists, in which case the rate must be clearly expressed in writing.
Absent agreement the legal rate is $5 upon $100 for one year (5 percent), per 138.04.
138.05(8)(c) removes post-1981 loans from the 138.05 ceiling (except penalty or late-charge-only forbearances for personal, family or household purposes); the usury penalty section, 138.06, does not apply to a loan or forbearance made on or after November 1, 1981 (138.06(8)).
The sources in their own words
- Interest limit: “rate of $12 upon $100 for one year” (Wis. Stat. 138.05 Maximum rate (Chapter 138 subchapter page)).
- Exemption or penalty: “This section does not apply to any loan or forbearance which is made on or after November 1, 1981” (Wis. Stat. 138.05 Maximum rate (Chapter 138 subchapter page)).
- Rate when none is agreed: “shall be $5 upon the $100 for one year” (Wis. Stat. 138.04 Legal rate).
- Exemption or penalty: “This section does not apply to a loan or forbearance made on or after November 1, 1981” (Wis. Stat. 138.06 Effect of usury and penalties).
- Time limit to sue: “within 6 years after the cause of action accrues” (Wis. Stat. 893.43 Action on contract).
- Signature: “unless the person signed the instrument” (Wis. Stat. 403.401 Signature).
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Signing the note: signature, witness, notary
A person is not liable on an instrument unless the person signed it, and a signature may be a name, word, mark or symbol adopted with present intention to authenticate a writing. A note is signed by the person who promises to pay.
None of the sections read for Wisconsin 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 upon a contract, obligation or liability must be commenced within 6 years after the cause of action accrues.
A worked example: a $15,000 note
Suppose a relative lends you $15,000 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): $297.02 a month, computed here from these assumed inputs, not quoted. Over the 60 payments that is $17,821.20 in total, of which $2,821.20 is interest.
The 7% rate is an assumed figure for the illustration, not a recommended or typical one; the Wisconsin 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 documents read do not set out any other Wisconsin statute that caps the rate on a one-off private note, so whether one applies 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 Wisconsin law requires one.
Common mistakes
- Leaving a rate above the legal rate unwritten: section 138.04 requires a contracted rate above the 5% legal rate to be clearly expressed in writing.
- Leaving the rate out: the legal rate of 5% applies when a note names none, and it is rarely what the parties meant.
- Waiting too long to enforce: Wisconsin 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
- Wis. Stat. 138.05 Maximum rate (Chapter 138 subchapter page): https://docs.legis.wisconsin.gov/statutes/statutes/138/05
- Wis. Stat. 138.04 Legal rate: https://docs.legis.wisconsin.gov/statutes/statutes/138/04
- Wis. Stat. 138.06 Effect of usury and penalties: https://docs.legis.wisconsin.gov/statutes/statutes/138/06
- Wis. Stat. 893.43 Action on contract: https://docs.legis.wisconsin.gov/statutes/statutes/893/iv/43
- Wis. Stat. 403.401 Signature: https://docs.legis.wisconsin.gov/statutes/statutes/403/iv/401
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.