Many state's laws provide that you cannot lend
money at an interest rate in excess of a certain statutory maximum.
This is a "usury limit." Unless Otherwise Stated, The Rates Are
Simple, Not Compound Interest. Further We Are Stating The
**Present** Limits, the ones applicable at the time that this
research was completed. Many states have had lower limits in the
past. Further, in most states a late charge or other fee exacted
from someone who owes another money is also counted as interest.
"But my car loan is higher than that"; "But I'm paying way more than
that on my credit cards." That's right! Banks have separate rules.
In fact, due to high inflation, in 1980, the federal government
passed a special law which allowed national banks (the ones that
have the word "national" or the term "N.A." in their name, and
savings banks that are federally chartered) to ignore state usury
limits and pegged the rate of interest at a certain number of points
above the federal reserve discount rate. In addition, specially
chartered organizations like small loan companies and installment
plan sellers (like car financing companies) have their own rules.
The usury limit which is stated as the general usury limit is the
rate that can be charged by one person or corporation to another, in
other words, if you lend your next door neighbor $ 100.00, the rate
stated is the limit. To charge more you must get a banking, pawn
broking, or whatever license. This also means that special kinds of
loans, like those from pawnbrokers or small loan companies are not
stated.
In some states we also have a "legal rate." In such states, as a
general rule, if you have a contractual obligation that provides
simply for interest without a specific term, or "interest at the
highest legal rate" then the "legal rate" what applies. In other
instances we have stated a "judgment rate." That's the rate that
final judgments bear. In states without a usury limit, there still
may be a federally imposed limit because at certain astronomical
rates of interest "loan sharking" will be inferred by the federal
government.
Usury Is A Complicated Area Of Law. Transactions that a person would
not consider to be affected by usury often are, for example,
repurchase agreements, or sales with an option to repurchase are
often found to be loans. A word of caution. Before trying to lend
someone money or "invest" with a guaranteed return, see an attorney
to make sure that you don't run afoul of the usury laws. In state's
that specify one limit for consumers and one limit for
non-consumers, you cannot avoid the usury limit by creating a sham
business deal. In a supplement that is now being prepared and will
be available soon, we will review the penalties for usury in each
state and point out special circumstances in each state.
ALABAMA, the legal rate of interest is 6%; the general usury limit
is
8%. The judgment rate is 12%.
ALASKA, the legal rate of interest is 10.5%; the general usury limit
is more than 5% above the Federal Reserve interest rate on the day
the loan was made.
ARIZONA, the legal rate of interest is 10%.
ARKANSAS, the legal rate of interest is 6%; for non-consumers the
usury limit is 5% above the Federal Reserve's interest rate; for
consumers the general usury limit is 17%. Judgments bear interest at
the rate of 10% per annum, or the lawful agreed upon rate, whichever
is greater.
CALIFORNIA, the legal rate of interest is 10% for consumers; the
general usury limit for non-consumers is more than 5% greater than
the Federal Reserve Bank of San Francisco's rate.
COLORADO, the legal rate of interest is 8%; the general usury limit
is 45%. The maximum rates to consumers is 12% per annum.
CONNECTICUT, the legal rate of interest is 8%; the general usury
rate is 12%. In civil suits where interest is allowed, it is allowed
at
10%.
DELAWARE, the legal rate of interest is 5% over the Federal Reserve
rate.
DISTRICT OF COLUMBIA, the legal rate of interest is 6%; the general
usury limit is in excess of 24%.
FLORIDA, the legal rate of interest is 12%; the general usury limit
is 18%. On loans above $ 500,000 the maximum rate is 25%.
GEORGIA, the legal rate of interest is 7%; On loans below $ 3,000
the usury limit is 16%. On loans above $ 3,000, the limit appears to
be
5% per month. As to loans below $ 250,000 the interest rate must be
specified in simple interest and in writing.
HAWAII, the legal rate of interest is 10%. The usury limit for
consumer transactions is 12%.
IDAHO, the legal rate of interest is 12%. Judgments bear interest at
the rate of 5% above the U.S. Treasury Securities rate.
ILLINOIS, the legal rate of interest is 5%. The general usury limit
is 9%. The judgment rate is 9%.
INDIANA, the legal rate of interest is 10%. Presently there is no
usury limit; however, legislation is pending to establish limits.
The judgment rate is also 10%.
IOWA, the legal rate of interest is 10%. In general consumer
transactions are governed at a maximum rate of 12%.
KANSAS, the legal rate of interest is 10%; the general usury limit
is
15%. Judgments bear interest at 4% above the federal discount rate.
On consumer transactions, the maximum rate of interest for the first
$ 1,000 is 18%, above $ 1,000, 14.45%.
KENTUCKY, the legal rate of interest is 8%; the general usury limit
is more than 4% greater than the Federal Reserve rate or 19%,
whichever is less. On loans above $ 15,000 there is no limit.
Judgments bear interest at the rate of 12% compounded yearly, or at
such rate as is set by the Court.
LOUISIANA, the legal rate of interest is one point over the average
prime rate, not to exceed 14% nor be less than 7%. Usury limit for
individuals is 12%, there is no limit for corporations. (As warned,
you cannot evade the limit by forming a corporation when the loan is
actually to an individual.)
MAINE, the legal rate of interest is 6%. Judgments below $ 30,000
bear 15%, otherwise they bear interest at the 52 week average
discount rate for T-Bills, plus 4%.
MARYLAND, the legal rate of interest is 6%; the general usury limit
is 24%. There are many nuances and exceptions to this law. Judgments
bear interest at the rate of 10%.
MASSACHUSETTS, the legal rate of interest is 6%; the general usury
rate is 20%. Judgments bear interest at either 12% or 18% depending
on whether the court finds that a defense was frivolous.
MICHIGAN, the legal rate of interest is 5%; the general usury limit
is 7%. Judgments bear interest at the rate of 1% above the five year
T-note rate.
MINNESOTA, the legal rate of interest is 6%. The judgment rate is
the "secondary market yield" for one year T-Bills. Usury limit is
8%.
MISSISSIPPI, the legal rate of interest is 9%; the general usury
limit is more than 10%, or more than 5% above the federal reserve
rate. There is no usury limit on commercial loans above $ 5,000. The
judgment rate is 9% or a rate legally agreed upon in the underlying
obligation.
MISSOURI, the legal and judgment rate of interest is 9%.
Corporations do not have a usury defense. (Remember that a
corporation set up for the purpose of loaning money to an individual
will violate the usury laws.)
MONTANA, the legal rate of interest is 10%; the general usury limit
is above 6% greater than New York City banks' prime rate. Judgments
bear interest at the rate of 10% per annum.
NEBRASKA, the legal rate of interest is 6%; the general usury limit
is 16%. Accounts bear interest at the rate of 12%. Judgments bear
interest at the rate of 1% above a bond yield equivalent to T-bill
auction price.
NEVADA, the legal rate of interest is 12%; there is no usury limit.
NEW HAMPSHIRE, the legal rate of interest is 10%; there is no
general usury rate.
NEW JERSEY, the legal rate of interest is 6%; the general usury
limit is 30% for individuals, 50% for corporations. There are a
number of exceptions to this law.
NEW MEXICO, the legal rate of interest is 15%. Judgment rate is
fixed by the Court.
NEW YORK, the legal rate of interest is 9%; the general usury limit
is 16%.
NORTH CAROLINA, the legal interest rate and the general usury limit
is 8%. However, there is a provision for a variable rate, which is
16% or the T-Bill rate for non-competitive T-Bills. Above $ 25,000
there is no express limit. However, the law providing for 8% is
still on the books- be careful and see a lawyer!
NORTH DAKOTA, the legal rate of interest is 6%; the general usury
limit is 5 1/2% above the six-month treasury bill interest rate. The
judgment rate is the contract rate or 12%, whichever is less. A late
payment charge of 1 3/4% per month may be charged to commercial
accounts that are overdue provided that the charge is revealed prior
to the account being opened and that the terms were less than thirty
days, that is, that the account terms were net 30 or less.
OKLAHOMA, the legal rate of interest is 6%. Consumer loans may not
exceed 10% unless the person is licensed to make consumer loans.
Maximum rate on non-consumer loans is 45%. The judgment rate is the
T-Bill rate plus 4%.
OREGON, the legal rate is 9%, the judgment rate is 9% or the
contract rate, if lawful, whichever is higher. The general usury
rate for loans below $ 50,000 is 12% or 5% above the discount rate
for commercial paper.
PENNSYLVANIA, the legal rate of interest is 6%, and this is the
general usury limit for loans below $ 50,000, except for: loans with
a lien on non-residential real estate; loans to corporations; loans
that have no collateral above $ 35,000. Judgments bear interest at
the legal rate. It is criminal usury to charge more than 25%.
PUERTO RICO, the legal rate of interest is 6%; all other rates are
set by the Finance Board of Office of Commissioner of Financial
Institutions. Judgments bear interest at the same rate as the
underlying debt.
RHODE ISLAND, the legal rate of interest and judgment rate is 12%.
The general usury limit is 21% or the interest rate charged for T-
Bills plus 9%.
SOUTH CAROLINA, the legal rate of interest is 8.75%, and judgments
bear interest at the rate of 14%. Subject to federal criminal laws
against loan sharking there is no general usury limit for non-
consumer transactions. The South Carolina Consumer Protection code
provides regulations for maximum rates of interest for consumer
transactions. Please consult with counsel for the latest rates.
SOUTH DAKOTA, the legal rate of interest is 15%, judgments bear
interest at the rate of 12%. There is no other usury limit. There
are certain limitations on consumer loans below $ 5,000.00.
TENNESSEE, the legal rate and judgment rate of interest is 10%. The
general usury limit is 24%, or four points above the average prime
loan rate, WHICHEVER IS LESS.
TEXAS, the legal rate of interest is 6%. Interest does not begin
until 30 days after an account was due. The judgment rate of
interest is 18% or the rate in the contract, whichever is less.
There are a number of specific ceilings for different types of
loans, please see counsel for information.
UTAH, the legal rate of interest is 10%. Judgments bear interest at
the rate of 12%, or a lawfully agreed upon rate. There are floating
rates prescribed for consumer transactions. Please see counsel for
information.
VERMONT, the legal rate of interest and judgment rate of interest is
12%. On retail installment contracts the maximum rate is 18% on the
first $ 500, 15% above $ 500. The general usury limit is 12%.
VIRGINIA, the legal rate of interest is 8%. Judgments bear interest
at the rate of 8%, or the lawful contract rate. Corporations and
business loans do not have a usury limit, and loans over $ 5,000 for
"business" or "investment" purposes are also exempt from usury laws.
Consumer loans are regulated and have multiple rates.
WASHINGTON, the legal rate is 12%. The general usury limit is 12%,
or four points above the average T-Bill rate for the past 26 weeks,
whichever is greater. (The maximum rate is announced by the State
Treasurer.) Judgments bear interest at the rate of 12% or the lawful
contract rate, whichever is higher.
WEST VIRGINIA, the legal rate of interest is 6%. The maximum
"contractual" rate is 8%; Commissioner of Banking issues rates for
real estate loans, and, may establish maximum general usury limit
based on market rates.
WISCONSIN, the legal rate of interest is 5%. There are a myriad of
rates for different type of loans. There is no general usury limit
for corporations. Note that a loan to an individual, even if a
corporation is formed, will violate the law. The judgment rate of
interest is 12%, except for mortgage foreclosures, where the rate
will be the lawful contract rate.
WYOMING, the legal rate and judgment rate of interest is 10%. If a
contract provides for a lesser rate, the judgment rate is the lesser
of 10% and the contract rate.
Brought to you by The 'Lectric Law Library --
http://www.lectlaw.com
The key to a successful action
against the predatory lending practices of lenders is accurate,
complete paperwork that properly cites the statutes and case law.
That is what an experienced, well-trained audit and compliance
professional can do for you.
Secrets of the Federal Reserve
by Eustace Mullins
To Contact an expert right now for more information to get started on these programs,
please click on one of these links and fill out the appropriate form.
The world gets crazier and crazier everyday, doesn't it? The world that many
of us thought was there, isn't. The bottom has dropped out of everything. The
illusions have been revealed, we have found out who has been pulling the strings
behind the scenes. Millions have lost their jobs, have mortgage
problems, and
foreclosure. What can be done? Amazingly, we have been mislead. We have been
taught that we can control government by voting. The founder of the Rothschild
dynasty, Mayer Amschel Bauer, told the secret of controlling the government
of a nation over 200 years ago. He said, "Permit
me to issue and control the money of a nation and I care not who makes its
laws." Get
the picture? Your freedom hinges first on the nation's banks and money system.
It's all about 'commerce'. Freedom is connected with Debt Elimination for
each individual. Not only does this end
personal debt, it places the people first in line
as creditors to the National Debt ahead of the banks. They don't wish for
you to know this. It has to do with recognizing WHO you really are in A
New Beginning: A Practical Course in Miracles, an informational study. Is
your credit rating bad for reasons that seem out of your control? There are
ways of credit repair,
so you can men those broken fences too. Do you want to keep your children protected
from outside forces, there are ways of protecting
your children. Do you want
to keep your sons and daughters free from 'the draft'? Check this out.
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