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INTEREST RATES



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." We provide in this tutorial the general usury rate
for each state that our research reveals has one. 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, pawnbroking, 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

In Alabama, the legal rate of interest is 6%; the general usury
limit is 8%. The judgment rate is 12%.


ALASKA

In 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

In Arizona, the legal rate of interest is 10%.



ARKANSAS

In 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

In 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

In Colorado, the legal rate of interest is 8%; the general usury
limit is 45%. The maximum rates to consumers is 12% per annum.



CONNECTICUT

In 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

In Delaware, the legal rate of interest is 5% over the Federal
Reserve rate.



DISTRICT OF COLUMBIA

In the District of Columbia, the legal rate of interest is 6%;
the general usury limit is in excess of 24%.



FLORIDA

In 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

In 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

In Hawaii, the legal rate of interest is 10%. The usury limit for
consumer transactions is 12%.



IDAHO

In Idaho, the legal rate of interest is 12%. Judgments bear
interest at the rate of 5% above the U.S. Treasury Securities
rate.



ILLINOIS

In Illinois, the legal rate of interest is 5%. The general usury
limit is 9%. The judgment rate is 9%.



INDIANA

In 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

In Iowa, the legal rate of interest is 10%. In general consumer
transactions are governed at a maximum rate of 12%.



KANSAS

In 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

In 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

In 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

In 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

In 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

In 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

In 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

In 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

In 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

In 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

In 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

In 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

In Nevada, the legal rate of interest is 12%; there is no usury
limit.



NEW HAMPSHIRE



In New Hampshire, the legal rate of interest is 10%; there is no
general usury rate.



NEW JERSEY

In 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

In New Mexico, the legal rate of interest is 15%. Judgment rate
is fixed by the Court.



NEW YORK

In New York, the legal rate of interest is 9%; the general usury
limit is 16%.



NORTH CAROLINA

In 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

In 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. 

  3 Responses to “Category : Databases and related files
Archive   : GUIDE75.ZIP
Filename : INTEREST.TUT

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