Colorado Unsecured Promissory Note Overview
An unsecured promissory note in Colorado 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 Colorado is 12% (default).
12% default rate; 21% for supervised lenders; 45% for consumer loans under $3,000. Unsecured notes carry more risk for the lender, so interest rates are typically higher than secured notes. However, the rate must still comply with Colorado's usury laws.
If the borrower defaults, the lender's primary remedy is filing a lawsuit within Colorado's statute of limitations (3 years (oral), 6 years (written)). The small claims court limit in Colorado is $7,500, which is ideal for smaller unsecured loans.
12% (default)
Usury rate cap
3 years
Statute of limitations
$7,500
Small claims limit
25%
Max garnishment
Colorado Legal Requirements
Colorado has specific requirements for unsecured promissory notes:
Important: Colorado Usury Laws
Colorado's maximum interest rate is 12% (default). 12% default rate; 21% for supervised lenders; 45% for consumer loans under $3,000. 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 Colorado's 12% (default) 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 Colorado law as the governing jurisdiction
Collection Remedies in Colorado
If a borrower defaults on an unsecured promissory note in Colorado, 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 ($7,500 limit)
Fast, affordable, no attorney required for amounts within the limit
File a Civil Lawsuit
For amounts above small claims limits, file in Colorado civil court
Enforce the Judgment
Up to 25% of disposable earnings. Bank account levies and property liens also available
Statute of Limitations in Colorado
The statute of limitations for collecting on a promissory note in Colorado is 3 years (oral), 6 years (written). After this period, the lender loses the right to file a lawsuit to enforce the note.
| Aspect | Colorado Rule |
|---|---|
| Usury Rate | 12% (default) |
| Statute of Limitations | 3 years (oral), 6 years (written) |
| Small Claims Limit | $7,500 |
| Garnishment Rules | Up to 25% of disposable earnings |
Sample Colorado Unsecured Promissory Note
Below is a preview of our Colorado-specific unsecured promissory note template.
STATE OF COLORADO
UNSECURED PROMISSORY NOTE
No Collateral Loan Agreement
LENDER:
Name: [Lender Name]
Address: [Colorado Address]
BORROWER:
Name: [Borrower Name]
Address: [Colorado Address]
LOAN TERMS
Principal: $[Amount]
Interest: [Rate]% per annum (max 12% (default) in CO)
This note is UNSECURED. No collateral has been pledged.
Colorado Unsecured Promissory Note FAQ
Answers to common questions about unsecured promissory notes and collection procedures in Colorado.
Official Colorado Resources
Use these official resources for Colorado lending laws and court procedures.
Other Colorado Promissory Note Types
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