Texas Promissory Note
Texas caps interest at 10 percent a year unless another law allows more, and the usury penalties are severe. A written note may instead use the optional weekly ceiling, which has an 18 percent floor and stood at 18.00 percent for the week of November 2, 2026. Texas also requires clear notice before a lender accelerates a note, unless the borrower has waived that notice in specific words.
What Texas law does to this document
The 10 percent default cap
The maximum rate of interest is 10 percent a year except as otherwise provided by law, and a greater rate is usurious unless another law allows it. All interest contracted for is aggregated and spread over the stated term to test the rate. If the parties agreed on no interest at all, the lender may charge legal interest of six percent a year beginning on the 30th day after the amount is due.
Tex. Const. art. XVI, § 11; Tex. Fin. Code §§ 302.001(b), 302.001(c), 302.002The optional weekly ceiling
The parties to a written agreement may agree to a rate that does not exceed the weekly ceiling. The ceiling is twice the 26-week Treasury bill auction rate, with a floor of 18 percent and a cap of 24 percent, or 28 percent for business, commercial or investment credit. The Office of Consumer Credit Commissioner publishes it each week. It was 18.00 percent for November 2 through November 8, 2026.
Tex. Fin. Code §§ 303.002, 303.003, 303.009Lending above 10 percent as a business
A separate chapter applies to loans above 10 percent a year that are made primarily for personal, family or household use by a person engaged in the business of making such loans. A person in that business must hold a license from the state. A lender who makes consumer loans regularly should not treat the weekly ceiling as the only rule.
Tex. Fin. Code §§ 342.005, 342.051Usury penalties and the chance to cure
On a personal, family or household loan, a creditor who contracts for, charges or receives usurious interest owes the greater of two amounts. One is three times the excess interest. The other is $2,000 or 20 percent of principal, whichever is less. A creditor who charges and receives more than twice the lawful amount is also liable to the borrower for the principal and for the interest and other amounts charged and received. The creditor escapes liability by correcting the violation within 60 days after discovering it and notifying the borrower first, and a borrower must give 60 days' written notice before suing.
Tex. Fin. Code §§ 305.001, 305.002, 305.006, 305.103Late charges
A loan bearing interest of 10 percent a year or less may also provide for a delinquency charge on a payment that has been in default for at least 10 days. The charge may not exceed the greater of five percent of the payment or $7.50. A late fee within these limits is in addition to the permitted interest.
Tex. Fin. Code § 302.001(d)Acceleration requires notice unless clearly waived
Before calling the whole balance due, the holder of a Texas note must give notice of intent to accelerate and then notice of acceleration. The borrower can waive these rights, but the Texas Supreme Court requires the waiver to be clear and unequivocal and to state each waived right specifically and separately. A general waiver of notice does not waive notice of intent to accelerate.
Shumway v. Horizon Credit Corp., 801 S.W.2d 890 (Tex. 1991)Where people go wrong in Texas
- Setting a rate above 10 percent in an informal or unwritten loan, or adding fees and default interest that push the total past the ceiling.
- Entering a late fee in the generator that applies before a payment is 10 days late, or exceeds the greater of five percent of the payment or $7.50, on a loan at 10 percent or less: the draft uses the grace period and fee entered and does not apply the limits in Tex. Fin. Code § 302.001(d).
- Accelerating on the strength of the generator's clause that the balance may be declared due "without further notice or demand": that general wording is not the separate, specific waiver Texas requires, so the holder should still send notice of intent to accelerate and then notice of acceleration.
How the generator works
A clear, enforceable IOU between two people, with optional interest, a repayment schedule, and current security and default terms. Answer a short interview and the draft assembles as you go, with Texas already set as the governing state. Download it as PDF or Word. No fee. No account.