Usury Laws
Protection Against Excessive Interest Rates
Usury laws specify and regulate the amount of interest that can be legally charged on a loan.
By design, these regulations target the act of charging excessively high interest rates on loans by placing caps on the maximum interest that can be collected. These laws are in place to protect consumers and investors from predatory lenders.
In the United States, usury laws are determined on a state-by-state basis. Although the federal government can, in theory, regulate rates via the Constitution’s interstate commerce clause, in practice it has generally deferred to the states to set and enforce their own interest rate regulations.
Each state then is responsible for drafting and enforcing its own usury law, specifying both the maximum interest rate and any specific limits.
For real estate investors seeking financing for potential properties, it is important to keep abreast of every state’s usury laws in order to anticipate the amount of interest you may potentially face from lenders dependent on location.
Below is a chart showing each state’s usury limits and rate of interest.
2017 Legal Rate of Interest and Usury Limits
| State | Statute | Legal Rate of Interest | Usury Limits |
|---|---|---|---|
| Alabama | Code of Ala. § 8-8-1 | 6% | 8% |
| Alaska | Alaska Stat. § 45.45.010 | 10.50% | 5% over Fed Res Interest rate* |
| Arizona | A.R.S § 44-1201 | 10% | No maximum provided |
| Arkansas | A.C.A. § 4-57-101/Ark Const. Amendment 89, § 3 | 6% | 17% |
| California | Cal Civ Code § 1916.12-1 | 7% | 12% |
| Colorado | C.R.S. 5-12-101, 103 | 8% (compounded) | 45% |
| Connecticut | Conn. Gen. Stat. § 37-1, 4 | 8% | 12% |
| Delaware | 6 Del. C. § 2301 | 5% over Fed Res rate | 5% over Fed Res Interest rate* |
| D.C. | D.C. Code § 28-3301, 2 | 6% | 24% |
| Florida | Fla. Stat. § 687.02, .071 | 18% | over $500,000 is 25%* |
| Georgia | O.C.G.A § 7-4-2 | 7% (simple) | $3000 or less 16%, other contracts no maximum* |
| Hawaii | HRS § 478-2 | 10% | 10% |
| Idaho | Idaho Code § 28-22-104 | 12% | No maximum provided |
| Illinois | 815 ILCS 205/1, 4 | 5% | 9% |
| Indiana | Burns ind. Code Ann. § 24-4.6-1-101, 2 | 8% | Presumed 8% if contested* |
| Iowa | Iowa Code § 535.2 | 5% | 2% over Fed Res Interest Rate* |
| Kansas | K.S.A. § 16-201, 207 | 10% | 15% |
| Kentucky | KRS § 360.010 | 8% | 19%, over $15,000 no maximum |
| Louisiana | La. R.S. § 9:3500 | 12% | No maximum provided for business purpose |
| Maine | 9-B M.R.S. § 432 | 6% | Loan secured by interest in real estate, no max* |
| Maryland | Md. COMMERCIAL LAW Code Ann. § 12-102, 3 | 6% | 8%* |
| Massachusetts | ALM GL ch. 107, § 3 / ALM GL ch. 271, § 49 | 6% | 20% |
| Michigan | MCLS § 438.31 | 5% | 7% |
| Minnesota | Minn. Stat. § 334.01 | 6% | 8% |
| Mississippi | Miss. Code Ann. § 75-17-1 | 8% | The greater of 15% or 5% above discount rate* |
| Missouri | § 408.030 R.S.Mo. | 9% | The greater of 10% or "market rate"* |
| Montana | 31-1-106, MCA / 31-1-107, MCA | 10% | The greater of 15% or 6% of prime rate* |
| Nebraska | R.R.S. Neb. § 45-101.03, 102 | 6% | 16% |
| Nevada | Nev. Rev. Stat. Ann. § 99.040 | 2% plus prime NV* | No maximum provided |
| New Hampshire | RSA Tit. XXXI, Ch. 336:1 | 10% | No maximum provided |
| New Jersey | N.J. Stat. § 31:1-1 | 6% | 16%* |
| New Mexico | N.M. Stat. Ann. § 56-8-3 | 15% | No maximum provided |
| New York | NY CLS Gen Oblig § 5-501 / NY CLS Bank § 14-a | 6% | 16%* |
| North Carolina | N.C. Gen. Stat. § 24-1, 1.1 | 8% | 6% over T-Bills, or if over $25,000 No maximum* |
| North Dakota | N.D. Cent. Code, § 47-14-09 | 6% | 5.5% over T-Bills* |
| Ohio | ORC Ann. 1343.01 | 8% | No maximum provided but with stipulations* |
| Oklahoma | Okl. Const. Art. XIV, § 2 | 6% | 10% |
| Oregon | ORS § 82.010 | 9% | $50,000 or less 12% or 5% over discount rate* |
| Pennsylvania | 41 P.S. § 201 | 6% | No maximum on $35,000 or more* |
| Rhode Island | R.I. Gen Laws § 6-26-1 | 12% | The greater of 21% or 9% over domestic prime |
| South Carolina | S.C. Code Ann. § 34-31-20 | 8.75% | No maximum provided |
| South Dakota | S.D. Codified Laws § 54-3-4 and 16 | 12% | No maximum provided |
| Tennessee | Tenn. Code Ann. §47-14-103/ § 45-2-1106 | 10% | 18% varies* |
| Texas | Tex. Fin. Code § 302.002 / § 303.009 | 6% | 28%* |
| Utah | Utah Code Ann. § 15-1-1 | 10% | No maximum provided |
| Vermont | 9 V.S.A. § 41a | 12% | 24% varies* |
| Virginia | Va. Code Ann. § 6.2-301 | 6% | No maximum provided |
| Washington | Rev. Code Wash. (ARCW) § 19.52.010, .020 | 12% | The greater of 12% or 4% above T-bills* |
| West Virginia | W. Va. Code § 47-6-5 | 6% | 8% |
| Wisconsin | Wis. Stat. § 138.04, 5 | 5% | 12%* |
| Wyoming | Wyo. Stat. § 40-14-106 | 7% | No maximum provided |
*Requires interpretation of the statutory law for accurate percentages. Consult an attorney for statutory interpretations of the law provided above.
These percentages are ever-changing. If you have specific questions, you should consult an attorney and/or look to the current state codes for the most current statutes. All amounts are stated in general terms as state specific variations to client specific scenarios will most likely apply.