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Home / Firm Blog / Banking/Credit Unions / What is the highest interest rate I can charge?
05
October
2015

What is the highest interest rate I can charge?

What is the highest interest rate I can charge?

Most of the time the highest interest rate an individual can charge another individual is 5% per year if there is no written agreement such as a promissory note documenting the loan. The highest rate an individual can charge another individual is 7% per year if there is a written agreement such as a promissory note documenting the loan. An individual (not a corporation or LLC) borrower can agree to pay an individual lender higher interest rates is he has provided a sworn statement in writing specifying the type of business and business purpose for which the proceeds of the loan or other extension of credit will be used and there is a written agreement such as a promissory note documenting the loan. An individual selling his principal residence and making a loan to the buyer secured by a first mortgage or a land contract can typically charge up to 11% per year. A corporation or LLC borrower can agree to pay an individual lender higher rates – often up to 25% per year. Of course, banks and credit unions can charge higher rates but they are regulated industries. Note that a person is guilty of criminal usury when, not being authorized or permitted by law to do so, he knowingly charges, takes or receives any money or other property as interest on the loan or forbearance of any money or other property, at a rate exceeding 25% at simple interest per annum or the equivalent rate for a longer or shorter period. Any person guilty of criminal usury may be imprisoned for a term not to exceed 5 years or fined not more than $10,000.00, or both. Each loan is unique so be sure to consult with your attorney.

Categories: Banking/Credit Unions

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