South Dakota Unsecured Promissory Note Overview
An unsecured promissory note in South Dakota 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 South Dakota is No cap (deregulated).
No usury cap; South Dakota eliminated usury limits in 1980. Unsecured notes carry more risk for the lender, so interest rates are typically higher than secured notes. However, the rate must still comply with South Dakota's usury laws.
If the borrower defaults, the lender's primary remedy is filing a lawsuit within South Dakota's statute of limitations (6 years (oral and written)). The small claims court limit in South Dakota is $12,000, which is ideal for smaller unsecured loans.
No cap (deregulated)
Usury rate cap
6 years
Statute of limitations
$12,000
Small claims limit
25%
Max garnishment
South Dakota Legal Requirements
South Dakota has specific requirements for unsecured promissory notes:
Important: South Dakota Usury Laws
South Dakota's maximum interest rate is No cap (deregulated). No usury cap; South Dakota eliminated usury limits in 1980. 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 South Dakota'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 South Dakota law as the governing jurisdiction
Collection Remedies in South Dakota
If a borrower defaults on an unsecured promissory note in South Dakota, 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 ($12,000 limit)
Fast, affordable, no attorney required for amounts within the limit
File a Civil Lawsuit
For amounts above small claims limits, file in South Dakota civil court
Enforce the Judgment
Up to 20% of disposable earnings. Bank account levies and property liens also available
Statute of Limitations in South Dakota
The statute of limitations for collecting on a promissory note in South Dakota is 6 years (oral and written). After this period, the lender loses the right to file a lawsuit to enforce the note.
| Aspect | South Dakota Rule |
|---|---|
| Usury Rate | No cap (deregulated) |
| Statute of Limitations | 6 years (oral and written) |
| Small Claims Limit | $12,000 |
| Garnishment Rules | Up to 20% of disposable earnings |
Sample South Dakota Unsecured Promissory Note
Below is a preview of our South Dakota-specific unsecured promissory note template.
STATE OF SOUTH DAKOTA
UNSECURED PROMISSORY NOTE
No Collateral Loan Agreement
LENDER:
Name: [Lender Name]
Address: [South Dakota Address]
BORROWER:
Name: [Borrower Name]
Address: [South Dakota Address]
LOAN TERMS
Principal: $[Amount]
Interest: [Rate]% per annum (max No cap (deregulated) in SD)
This note is UNSECURED. No collateral has been pledged.
South Dakota Unsecured Promissory Note FAQ
Answers to common questions about unsecured promissory notes and collection procedures in South Dakota.
Official South Dakota Resources
Use these official resources for South Dakota lending laws and court procedures.
Other South Dakota Promissory Note Types
Need a different type of promissory note for South Dakota?
South Dakota Secured Promissory Note
Collateral-backed loan agreement
South Dakota Demand Promissory Note
Payable on demand, no fixed maturity
General Promissory Note
Standard promissory note template
South Dakota Loan Agreement
Comprehensive loan documentation
South Dakota Bill of Sale
Document property transfers
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