California Demand Promissory Note Overview
A demand promissory note in California 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 California is 10% (non-exempt).
10% for non-exempt personal loans; no cap for banks or licensed lenders. Demand notes are commonly used in California for family loans, loans between friends, shareholder loans, and informal business financing where both parties want flexibility.
Regarding demand notice in California: No fixed statutory period; reasonable time required. The statute of limitations for collecting on a promissory note in California is 2 years (oral), 4 years (written), though the start date for demand notes can vary.
10% (non-exempt)
Usury rate cap
On Demand
No fixed maturity
2 years
Statute of limitations
30 Days
Recommended notice
California Legal Requirements
California has specific requirements for demand promissory notes:
Important: California Usury & Demand Rules
California's maximum interest rate is 10% (non-exempt). No fixed statutory period; reasonable time required. 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 California's 10% (non-exempt) usury cap
- Delivery Method: Specify how demand must be delivered (certified mail recommended)
- Governing Law: Specify California as the governing jurisdiction
Making a Demand in California
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 California 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, suit in small claims, limited civil, or unlimited civil court
Collection Procedures in California
If the borrower fails to pay after a proper demand, the lender can pursue legal remedies in California.
| Aspect | California Rule |
|---|---|
| Usury Rate | 10% (non-exempt) |
| Demand Notice | No fixed statutory period; reasonable time required |
| Statute of Limitations | 2 years (oral), 4 years (written) |
| Collection Procedure | Demand letter, suit in small claims, limited civil, or unlimited civil court |
Sample California Demand Promissory Note
Below is a preview of our California-specific demand promissory note template.
STATE OF CALIFORNIA
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: [California Address]
BORROWER:
Name: [Borrower Name]
Address: [California Address]
TERMS
Interest: [Rate]% per annum (max 10% (non-exempt) in CA)
Payable within 30 days of written demand by Lender
California Demand Promissory Note FAQ
Answers to common questions about demand promissory notes in California.
Official California Resources
Official resources for California lending laws and court procedures.
Other California Promissory Note Types
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