If you need more help understanding government interest rates or wear and tear limits, post your job on the UpCounsel marketplace. UpCounsel only accepts the top 5% of lawyers on its website. UpCounsel lawyers come from law schools such as Harvard Law and Yale Law and have an average of 14 years of legal experience, including working with or on behalf of companies such as Google, Menlo Ventures, and Airbnb. In other words, if you lend $100.00 to your neighbor, the listed price is the limit. If you want to charge more than the advertised price, you will need a special license such as a banking license or pawnshop license. This also means that special types of loans, such as those from pawnshops or small credit companies, are not specified. Maximum statutory interest rates. (a) General Loans: (i) The maximum legal interest rate for a contract entered into after the effective date of this Agreement shall not exceed five percent (5%) per annum above the Federal Reserve discount rate at the time of the Agreement. (ii) All contracts with an interest rate higher than the statutory maximum interest rate are void in respect of unpaid interest. A person who has paid interest above the legal maximum rate may recover twice the amount of interest paid within the period provided by law. It is illegal for a person to knowingly charge an interest rate higher than the maximum legal rate in effect at the time the contract is entered into, and any person who does so will be subject to the penalty provided by law. (b) Consumer credit and credit sales: All consumer credit and credit sales agreements with an interest rate exceeding seventeen per cent (17 per cent) per annum are void with respect to principal and interest, and prohibited by law by the General Assembly. (c) Definitions: For the purposes of this Agreement, “consumer credit and credit sales” means credit extended to an individual when the money, good or service that is the subject of the transaction is primarily intended for personal, family or household purposes.
(ii) “Federal Reserve Bank Rate” means the Federal Reserve Bank Rate for ninety-day commercial notes applicable to the Federal Reserve Bank in the Federal Reserve District of Arkansas. (d) Miscellaneous: (i) The interest rate for contracts for which no interest rate is agreed is six per cent (6%) per annum. (ii) The provisions contained herein are not intended and shall not be deemed to be a substitute for or otherwise invalid for any provision of federal law applicable to loans or interest rates, including loans secured by residential real estate. (iii) The provisions of this Agreement supersede all provisions of the law of the State which determine the maximum rate of interest payable in the State or which are otherwise in conflict with this Agreement. [In the by Const. Amend. 60 amended.] The laws of many states state that you cannot lend money at an interest rate higher than a certain legal maximum called a “usury limit.” 9 min read For some states, we have also listed a “statutory tariff”. If you have a contractual obligation in these states that only provides for interest without a defined term or “interest at the highest legal rate”, the “legal interest rate” indicated applies. The following table provides more details on interest rate limits in Arkansas. For more information, see FindLaw`s Collection Laws and Personal Finance sections. The parties may agree in writing to pay interest not exceeding the applicable interest rate, if any, as set forth in the Arkansas Constitution by Amendment 89 relating to amounts due or becoming due. Arkansas` statutory interest rate limits are encoded in the state constitution, which states that interest rates for consumers and non-consumers cannot be higher than 5% higher than the Federal Reserve`s discount rate (a maximum of 17% for consumer loans).
But keep in mind that this law does not apply to most bank loans, as explained in the previous section. Section 731, as applied in Arkansas, states that the highest interest rate allowed in Arkansas is the higher of (a) the maximum rate authorized by the home state of an Arkansas bank branch, or (b) the rate set by the Arkansas Usury Act. So if a non-state bank opened a branch in Arkansas and the home state of the non-state bank branch had no cap on interest rates, there would be virtually no usury limit in Arkansas. The Court of Appeals for the Eighth Circuit has had several opportunities to interpret the effect of Section 731 on Section 19, Section 13 of the Arkansas Constitution, as amended by Amendment 60.
