Arizona Unsecured Promissory Note Overview
An unsecured promissory note in Arizona is a loan agreement where the borrower promises to repay without pledging any collateral. The lender relies on the borrower's creditworthiness and the legally enforceable promise to pay. The maximum interest rate in Arizona is No cap (deregulated).
Arizona has no usury cap for most loans; rate is governed by contract. Unsecured notes carry more risk for the lender, so interest rates are typically higher than secured notes. However, the rate must still comply with Arizona's usury laws.
If the borrower defaults, the lender's primary remedy is filing a lawsuit within Arizona's statute of limitations (3 years (oral), 6 years (written)). The small claims court limit in Arizona is $3,500, which is ideal for smaller unsecured loans.
No cap (deregulated)
Usury rate cap
3 years
Statute of limitations
$3,500
Small claims limit
25%
Max garnishment
Arizona Legal Requirements
Arizona has specific requirements for unsecured promissory notes:
Important: Arizona Usury Laws
Arizona's maximum interest rate is No cap (deregulated). Arizona has no usury cap for most loans; rate is governed by contract. Exceeding this limit may void the interest or result in penalties.
- Written Agreement: Must be in writing, signed by borrower, clearly stating loan terms
- Compliant Interest Rate: Must not exceed Arizona's No cap (deregulated) usury cap
- No Collateral Statement: Explicitly state that the note is unsecured with no collateral pledged
- Default Provisions: Events of default, cure period, acceleration clause, and collection remedies
- Personal Guarantee: Recommended for business borrowers to protect the lender
- Governing Law: Specify Arizona law as the governing jurisdiction
Collection Remedies in Arizona
If a borrower defaults on an unsecured promissory note in Arizona, the lender has several collection options:
Send a Formal Demand Letter
Written notice demanding payment within a specified timeframe, creating a paper trail
File in Small Claims Court ($3,500 limit)
Fast, affordable, no attorney required for amounts within the limit
File a Civil Lawsuit
For amounts above small claims limits, file in Arizona civil court
Enforce the Judgment
Up to 25% of disposable earnings. Bank account levies and property liens also available
Statute of Limitations in Arizona
The statute of limitations for collecting on a promissory note in Arizona is 3 years (oral), 6 years (written). After this period, the lender loses the right to file a lawsuit to enforce the note.
| Aspect | Arizona Rule |
|---|---|
| Usury Rate | No cap (deregulated) |
| Statute of Limitations | 3 years (oral), 6 years (written) |
| Small Claims Limit | $3,500 |
| Garnishment Rules | Up to 25% of disposable earnings |
Sample Arizona Unsecured Promissory Note
Below is a preview of our Arizona-specific unsecured promissory note template.
STATE OF ARIZONA
UNSECURED PROMISSORY NOTE
No Collateral Loan Agreement
LENDER:
Name: [Lender Name]
Address: [Arizona Address]
BORROWER:
Name: [Borrower Name]
Address: [Arizona Address]
LOAN TERMS
Principal: $[Amount]
Interest: [Rate]% per annum (max No cap (deregulated) in AZ)
This note is UNSECURED. No collateral has been pledged.
Arizona Unsecured Promissory Note FAQ
Answers to common questions about unsecured promissory notes and collection procedures in Arizona.
Official Arizona Resources
Use these official resources for Arizona lending laws and court procedures.
Other Arizona Promissory Note Types
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