Historically, charging an excessive rate of interest was frowned upon in many major religions and societies. Usury laws have been around for centuries to prohibit lenders from charging interest above a set rate and those who do so. Today, most states still set a maximum allowable rate of interest and enforce other laws governing interest on loans. This is a quick introduction on Montana interest rate laws.
Interest Rate Laws
There’s an immediate point to know about when it comes to Montana interest rate laws. While Montana sets a maximum interest rate, it doesn’t apply to regulated lenders such as banks, savings and loans associations, and credit unions. Since these regulated lenders make a large proportion of loans, and because national banks can charge interest rates based on the laws of their home state, Montana interest rate laws may not affect most consumers.
Most other interest rates on loans are regulated. Family members, friends, employers, colleagues, and businesses make loans every day. These loans are often put into contracts, and contracts are enforced by state courts using state law. Montana sets a legal interest rate, or a default rate, of 10% annually. Additionally, loans made in writing are permitted a maximum interest rate of 15% per year or else 6% above the prime rate set by the Federal Reserve.
Montana sets punishments for charging excessive interest rates. A lender who charges above the maximum rate forfeits a sum equal to double the entire amount of interest on the loan. The borrower can also recover this amount by filing a lawsuit against the lender. There are some procedural hurdles involved. Montana law requires a written demand for the return of interest be sent to a usurious lender before a lawsuit can be filed. There’s also a two-year statute of limitations on bringing an interest rate-based suit.
|Legal Maximum Rate of Interest||15% annually by written agreement or 6% above the Federal Reserve's prime rate (31-1-108).|
|Major Exemptions||Regulated lenders (31-1-112; 31-1-111); transactions between merchants (31-1-112); Nationally-chartered banks.|
|Penalty for Usury (Unlawful Interest Rate)||Forfeiture of double the interest received (31-1-108).|
|Interest Rate on Judgements||10% or the contract rate (25-9-205).|
Montana Interest Rate Laws: Related Resources
All laws are publicly accessible and you can view Montana’s interest rate laws online. If you or someone you know has been charged an excessively high rate of interest, you may be able to recover the interest by filing a lawsuit. A Montana consumer attorney can offer expert advice and provide legal options.
Contact a qualified attorney.