The lenders made two separate loans to the borrower: a $230,000 loan on April 7, 2020, and a $100,000 loan on May 1, 2020. The promissory notes for each loan provided for a 30% interest rate, and also provided that “[a]ll accrued interest and unpaid principal” was due a year following the execution of the notes. The borrowers failed to make any payments on the loans by their due dates. In June 2022, the lenders sued the borrowers for the loan amounts plus interest, calculating the interest for each loan from the date the loans were made. In a motion for judgment on the pleadings, the trial court held that the interest for the loans began accruing from a year after each note was due rather than from the day they were each signed. The lenders appealed, arguing that the interest accrued from the day the lenders made the loans.
In Longphre v. KT Financial, LLC, 898 S.E.2d 354 (N.C. Ct. App. 2024), the court affirmed the trial court’s ruling. The promissory notes stated that “accrued interest” was due along with the loans’ balances a year after the lenders issued the loans but did not explain when the interest began to accrue. In the absence of a date specifying when interest begins accruing, North Carolina law establishes the date of accrual as “from the time [a loan] becomes due.” N.C. Gen. Stat. § 24-3(1). Accordingly, interest on the loans began accruing when the loans were due, a year after being issued.
By Gregory Ferrer, [email protected]
Edited By Ashley Boyce, [email protected]
Edited By Hayden Mariott, [email protected]