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Newsletter of the Commercial Collection Agency Association of the Commercial Law League of
America
SUMMARY OF MAXIMUM PERMISSIBLE RATES UNDER STATE USURY LAWS (JUNE, 2006)
The information below is believed to be accurate; but it is intended only for general reference and should be verified in any state before charging interest in that state.
The summary includes the legal rate, the contract rate, the judgment rate and any special corporate rate. Since the contract rate applies only when the parties agree, there generally must be a written agreement and many states require that it be signed by the debtor.
Federal Preemption. Public Law 96-221, approved March 31, 1980, permanently preempted the provisions of the constitution of law of any State limiting the rate or amount of interest, discount points, finance charges or other charges that may be charged on loans secured by first liens on residential real property and certain other mortgage loans -- unless the state acted to override the preemption.
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STATE
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LEGAL
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CONTRACT
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JUDGMENT
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CORPORATE
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Alabama
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6%
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Greater of 8% or 1% above discount rate or 2% above prime rate
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12%
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Any rate agreed to over $2,000
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Alaska
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10.5%
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11%; any rate over $25,000
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10.5%
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No Special Rate
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Arizona
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10.0%
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Rate agreed to in writing
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10%
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No Special Rate
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Arkansas
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6%
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11%
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See Note 1
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No Special Rate
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California
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7%
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10% for personal, family or household purposes or any other purposes
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10%
See Note 2
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No Special Rate
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Colorado
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8%
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As set out in instrument except as limited by U.C.C.
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8%
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No Special Rate
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Connecticut
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8%
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12%
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10%
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Any rate over $10,000
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Delaware
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11%
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11% plus surcharge; any rate over $100,000 not secured by mortgage or residence
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11%
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No Special Rate
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District of Columbia
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6%
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24%; any rate on loans over $1,000
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70% of rate tax by I.R.S for underpayment
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Any rate
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Florida
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10%
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18%; over $500,000 - 25%
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10%
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No Special Rate
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Georgia
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7%
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16%; any rate over $3,000
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12%
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No Special Rate
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Hawaii
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10%
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1% per month
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10%
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No Special Rate
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Idaho
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12%
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Any rate agreed upon
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8.375%
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No Special Rate
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Illinois
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5%
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9%; any rate business loans
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9%
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Any Rate
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Indiana
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8%
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See U.C.C.
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8%
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No Special Rate
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Iowa
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5%
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7% as of July, 2006; any rate agreed for business purposes or over $25,000 for personal or household purposes
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2% over rate on 52 wk. T-Bill
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Any Rate
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Kansas
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10%
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15% unless otherwise by law
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8.25%
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No Special Rate
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Kentucky
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8%
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10% on loans $15,000 or less; 7% on bank & trust company loans of $15,000 or less; others any rate
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12%
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No Special Rate
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Louisiana
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12%
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12%; business loans any rate
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8%
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Any Rate
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Maine
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6%
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No maximum on commercial if in writing
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8% up to $30,000
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No Special Rate
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Maryland
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6%
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8%; any rate on commercial loans over $15,000
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10%*
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Any Rate
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Massachusetts
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6%
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No limit
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12%
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No Special Rate
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Michigan
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5%
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7%; any rate on business loan by bank, insurance company, or financial subsidiary of manufacturing company: 11% on other business loans
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12% or rate specified in contract but not over 13%
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Any Rate
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Minnesota
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6%
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8%; 10.08% business loans under $100,000; any rate agreed in writing over $100,000
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See Note 3
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No Special Rate
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Mississippi
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8%
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11%; 15% on organizational loans over $2,000
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8%
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15% over $2,500
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Missouri
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9%
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10% for quarter beginning
4/1/06
; any rate business loans of $5,000 or more
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9%
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Any Rate
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Montana
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10%
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6% above prime rate at major
New York
banks 3 days before contract
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10%
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No Special Rate
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Nebraska
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6%
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16%; any rate for corporate loans and loans over $25,000
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See Note 4
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Any Rate
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Nevada
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See Note 5
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Any rate agreed to
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See Note 5
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No Special Rate
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STATE
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LEGAL
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CONTRACT
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JUDGMENT
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CORPORATE
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New Hampshire
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10%
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Any rate agreed to
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See Note 6
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No Special Rate
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New Jersey
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6%
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16%
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No Provisions
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No Special Rate
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New Mexico
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15%
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As agreed by parties in writing
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8.75%
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No Special Rate
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New York
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16%, see Note 7
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See Note 7
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9%
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No Special Rate
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North Carolina
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8%
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16% $25,000 or less; any rate over $25,000
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8%
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Any Rate Agreed
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North Dakota
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6%
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See Note 8
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12%
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No Special Rate
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Ohio
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5%
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8%; Any rate for business loans
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7%*
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No Special Rate
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Oklahoma
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6%
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Any rate unless subject to U.C.C.
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See Note 9
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No Special Rate
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Oregon
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9%
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See Note 10
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9%
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No Special Rate
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Pennsylvania
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6% to $50,000
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7.75%
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6%
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No Special Rate
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Rhode Island
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12%
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21% or alternative rate of 9% plus domestic prime rate
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12%
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No Special Rate
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S. Carolina
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6% or 8.75%, See Note 11
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Any rate or as provided in Consumer Protection Code
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12%
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No Special Rate
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South Dakota
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15%
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Any rate unless specifically limited by Code
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10%
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Any rate unless limited by Code
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Tennessee
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10%
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4% over average weekly prime rate
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10%
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No Special Rate
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Texas
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6%
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Any rate agreed to up to 18%. See Note 12
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See Note 12
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See Note 12
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Utah
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10%
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Agreed rate
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Agreed Rate
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No Special Rate
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Vermont
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12%
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Legal Rate
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12%
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No Limit
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Virginia
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6%
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12%; any rate on non-agricultural loans
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6%
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No Special Rate
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Washington
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12%
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12%
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See Note 13
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No Special Rate
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West Virginia
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6%
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8%; See Note 14
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10%
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No Special Rate
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Wisconsin
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5%
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Any rate not exceeding various statutory maximums
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12%
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No Special Rate
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Wyoming
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7%
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See U.C.C.
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10%
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No Special Rate
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* Indicates judgment rate applies unless other rate specified in contract. Where "No special rate" for corporations, the legal or contract rate applies.
Note 1.
Arkansas
judgment rate on contracts is greater of rates provided in contract or 10%. On other judgments rate is lesser of 10% or current contract limit.
Note 2.
California
Constitution sets interest rate on judgments at 7% but authorizes the legislature to set the rate at no more than 10%. Section 685.010 added in 1982 provides interest rate of 10 % on amount of judgment remaining unsatisfied, applicable to judgments entered on or after
February 1, 1996
.
Note 3.
Minnesota
rate on judgments is based on current average yield on U.S. Treasury bills with one-year maturities. State court administrator determines the yearly rate by December 20 of each year.
Note 4.
Nebraska
judgment rate is 1% over average U.S. 52 week Treasury bill equivalent on date of judgment or as specified by law or by agreement.
Note 5.
Nevada
legal rate and judgment rates are 2% over prime rate at largest bank in state on January 1 or July 1 immediately preceding judgment.
Note 6.
New Hampshire
judgment rate is 2% over average U.S. 52 week Treasury Bill rate at their last auction prior to September 30.
Note 7.
New York
Section 5-501 of the General Obligation Law Provides:
"1. The rate of interest, as computed pursuant to this title, upon the loan or forbearance of any money, goods, or things in action, except as provided in subdivisions five and six of this section or as otherwise provided by law shall be six per centum per annum unless a different rate is prescribed in section fourteen-a of the banking law."
Section 14-a of the Banking Law was amended in 1980 to provide:
5. Wherever reference is made in this chapter or in any other law, contract or document to the rate of interest prescribed by the banking board or the superintendent pursuant to this section or any former section fourteen-a of this chapter, such a reference shall be deemed a reference to the rate of interest prescribed in subdivision one of this section."
There is some doubt that the 6% rate can be used on claims for goods sold and delivered in the absence of a contract specifying a rate.
Note 8.
North Dakota
contract rate is 5.5% over the average rate for 6-month U.S. Treasury bills but not less than 7%.
Note 9.
Oklahoma
judgment rate is 2% over U.S. T-bill rate for previous year.
Note 10. Oregon The rate of interest shall be as agreed between the parties, except (a) on loans under $50,000 the rate shall not exceed greater of 12% or 5% in excess of discount rate on 90-day commercial paper at the Federal Reserve Bank and (b) if parties have not otherwise agreed, rate in the following transactions is 9%: (i) all moneys after they become due (open accounts bear interest from date of last item), (ii) money received to use of another and retained beyond reasonable time without consent and (iii) money due when there is a contract to pay interest and no rate is specified.
Note 11.
South Carolina
legal rate is 8.75% when term "legal rate" is used in contract, judgment or document.
Note 12.
Texas
contract rate ceiling is based on average 26-month U.S. Treasury bills multiplied by 2, but not less than 18% or more than 24% (18% for quarter beginning
4/1/06
).
Texas
judgment rate for contract cases is lesser of 18% or rate specified in contract; for other judgments rate is based on 52-week U.S. Treasury bill not less than 5% or more than 20%.
Note 13.
Washington
judgment rate is as contract provides, otherwise the higher of 12% or 4% above coupon yield of 26-week Treasury bills.
Note 14.
West Virginia
Lender, sellers and other creditors are authorized to charge, as an alternative to other rates under any provision, up to a maximum rate fixed by the Lending and Credit Rate Board (18% in June 2006). No law limiting interest rates may be applied to any debt incurred by a loan, installment sale or similar transaction primarily for a business purpose.
Copyright June 2006 -- Commercial Collection Agency Association, Commercial Law League of
America
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