Alabama Demand Promissory Note Overview
A demand promissory note in Alabama is a flexible loan agreement where the lender can request full repayment at any time. There is no fixed maturity date — the loan remains outstanding until the lender makes a formal demand. The maximum interest rate in Alabama is 8%.
8% default rate; parties may contract up to any rate if in writing. Demand notes are commonly used in Alabama for family loans, loans between friends, shareholder loans, and informal business financing where both parties want flexibility.
Regarding demand notice in Alabama: No specific statutory notice period; reasonable time applies. The statute of limitations for collecting on a promissory note in Alabama is 6 years (written contracts), though the start date for demand notes can vary.
8%
Usury rate cap
On Demand
No fixed maturity
6 years
Statute of limitations
30 Days
Recommended notice
Alabama Legal Requirements
Alabama has specific requirements for demand promissory notes:
Important: Alabama Usury & Demand Rules
Alabama's maximum interest rate is 8%. No specific statutory notice period; reasonable time applies. Specify a clear notice period in your note to avoid disputes.
- Written Agreement: Must be in writing and signed by the borrower
- Demand Clause: Clearly state the note is “payable on demand”
- Notice Period: Specify days borrower has to pay after written demand (30-90 days recommended)
- Compliant Interest Rate: Must not exceed Alabama's 8% usury cap
- Delivery Method: Specify how demand must be delivered (certified mail recommended)
- Governing Law: Specify Alabama as the governing jurisdiction
Making a Demand in Alabama
When the lender is ready to call in the loan, they must follow proper demand procedures:
Prepare the Demand Letter
State the total amount owed (principal + accrued interest), reference the original note, and specify the deadline for payment
Send via Certified Mail
Send the demand letter by certified mail with return receipt to prove delivery under Alabama law
Wait the Notice Period
Allow the borrower the full notice period specified in the note (or a reasonable time if not specified) to arrange payment
Pursue Collection if Unpaid
Demand letter, then civil suit in circuit or district court
Collection Procedures in Alabama
If the borrower fails to pay after a proper demand, the lender can pursue legal remedies in Alabama.
| Aspect | Alabama Rule |
|---|---|
| Usury Rate | 8% |
| Demand Notice | No specific statutory notice period; reasonable time applies |
| Statute of Limitations | 6 years (written contracts) |
| Collection Procedure | Demand letter, then civil suit in circuit or district court |
Sample Alabama Demand Promissory Note
Below is a preview of our Alabama-specific demand promissory note template.
STATE OF ALABAMA
DEMAND PROMISSORY NOTE
Payable on Demand — No Fixed Maturity
FOR VALUE RECEIVED, the undersigned promises to pay ON DEMAND to the order of Lender the sum of $[Amount]
LENDER:
Name: [Lender Name]
Address: [Alabama Address]
BORROWER:
Name: [Borrower Name]
Address: [Alabama Address]
TERMS
Interest: [Rate]% per annum (max 8% in AL)
Payable within 30 days of written demand by Lender
Alabama Demand Promissory Note FAQ
Answers to common questions about demand promissory notes in Alabama.
Official Alabama Resources
Official resources for Alabama lending laws and court procedures.
Other Alabama Promissory Note Types
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