Newsletter of the Commercial Collection Agency Association of the Commercial Law League of America

SUMMARY OF MAXIMUM PERMISSIBLE RATES UNDER STATE USURY LAWS (MARCH, 2010)

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.

STATE

LEGAL

CONTRACT

JUDGMENT

CORPORATE

Alabama

6%

Greater of 8% or 1% above discount rate or 2% above prime rate

12%

Any rate agreed to over $2,000

Alaska

10.5%

5.5%; any rate over $25,000

10.5%

No Special Rate

Arizona

10.0%

Rate agreed to in writing

10%

No Special Rate

Arkansas

6%

5.5%

See Note 1

No Special Rate

California

7%

10% for personal, family or household purposes or any other purposes

10%
See Note 2

No Special Rate

Colorado

8%

As set out in instrument except as limited by U.C.C.

8%

No Special Rate

Connecticut

8%

12%

10%

Any rate over $10,000

Delaware

5.5%

5.5% plus surcharge; any rate over $100,000 not secured by mortgage or residence

5.5%

No Special Rate

District of Columbia

6%

24%; any rate on loans over $1,000

70% of rate tax by I.R.S for underpayment

Any rate

Florida

10%

18%; over $500,000 - 25%

6%

No Special Rate

Georgia

7%

16%; any rate over $3,000

12%

No Special Rate

Hawaii

10%

1% per month

10%

No Special Rate

Idaho

12%

Any rate agreed upon

 5.625%

No Special Rate

Illinois

5%

9%; any rate business loans

9%

Any Rate

Indiana

8%

See U.C.C.

8%

No Special Rate

Iowa

5%

7% as of July, 2006; any rate agreed for business purposes or over $25,000 for personal or household purposes

2% over rate on 52 wk. T-Bill

Any Rate

Kansas

10%

15% unless otherwise by law

4.5%

No Special Rate

Kentucky

8%

4.5% on loans $15,000 or less; 1.5% on bank & trust company loans of $15,000 or less; others any rate

12%

No Special Rate

Louisiana

12%

12%; business loans any rate

3.75%

Any Rate

Maine

6%

No maximum on commercial if in writing

8% up to $30,000

No Special Rate

Maryland

6%

8%; any rate on commercial loans over $15,000

10%*

Any Rate

Massachusetts

6%

No limit

12%

No Special Rate

Michigan

5%

7%; any rate on business loan by bank, insurance company, or financial subsidiary of manufacturing company: 11% on other business loans

13% or rate specified in contract but not over 13%

Any Rate

Minnesota

6%

8%; 10.08% business loans under $100,000; any rate agreed in writing over $100,000

See Note 3

No Special Rate

Mississippi

8%

11%; 15% on organizational loans over $2,000

8%

15% over $2,500

Missouri

9%

10% for quarter beginning 1 /1/ 10 ; any rate business loans of $5,000 or more

9%

Any Rate

Montana

10%

6% above prime rate at major New York banks 3 days before contract

10%

No Special Rate

Nebraska

6%

16%; any rate for corporate loans and loans over $25,000

See Note 4

Any Rate

Nevada

5.25% - See Note 5

Any rate agreed to

5.25% - See Note 5

No Special Rate


STATE

LEGAL

CONTRACT

JUDGMENT

CORPORATE

New Hampshire

10%

Any rate agreed to

See Note 6

No Special Rate

New Jersey

6%

16%

No Provisions

No Special Rate

New Mexico

15%

As agreed by parties in writing

8.75%

No Special Rate

New York

16%

See Note 7

9%

No Special Rate

North Carolina

8%

16% $25,000 or less; any rate over $25,000

8%

Any Rate Agreed

North Dakota

6%

See Note 8

12%

No Special Rate

Ohio

5%

8%; Any rate for business loans

7%*

No Special Rate

Oklahoma

6%

Any rate unless subject to U.C.C.

See Note 9

No Special Rate

Oregon

9%

See Note 10

9%

No Special Rate

Pennsylvania

6% to $50,000

6.5%

6%

No Special Rate

Rhode Island

12%

21% or alternative rate of 9% plus domestic prime rate

12%

No Special Rate

S. Carolina

6% or 8.75%, See Note 11

Any rate or as provided in Consumer Protection Code

7.25%

No Special Rate

South Dakota

12%

Any rate unless specifically limited by Code

10%

Any rate unless limited by Code

Tennessee

10%

4% over average weekly prime rate

10%

No Special Rate

Texas

6%

Any rate agreed to up to 18%.  See Note 12

See Note 12

See Note 12

Utah

10%

Agreed rate

Agreed Rate

No Special Rate

Vermont

12%

Legal Rate

12%

No Limit

Virginia

6%

12%; any rate on non-agricultural loans

6%

No Special Rate

Washington

12%

12%

See Note 13

No Special Rate

West Virginia

6%

8%; See Note 14

10%

No Special Rate

Wisconsin

5%

Any rate not exceeding various statutory maximums

12%

No Special Rate

Wyoming

7%

See U.C.C.

Contract Rate or 10%

No Special Rate

* 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 4% 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 1 /1/ 10 ).  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 March 2010 -- Commercial Collection Agency Association, Commercial Law League of America

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