Montana Usury Laws
Montana has a bit of a complicated statutory scheme when it comes to usury limitations. In this regard, Montana ties the usury ceiling with the prime rate charged by banks in New York City. Specifically, the usury ceiling on personal loans in Montana has been set at no more than 6% greater that the prime rate charged by banks in New York City (more on New York usury laws).
Judgments on civil actions in Montana will have an interest rate of 10% per annum. This will be the interest rate on judgments in civil cases on Montana even if there is some sort of agreement calling for a higher interest rate. While an agreement for a lower interest rate on a judgment will survive judicial scrutiny, an agreement for interest on a judgment in excess of 10% will not be acceptable.
As a rule, in Montana any contract for a personal loan that includes a provision for interest to be paid at a rate above and beyond the usury ceiling set forth earlier in this article will be deemed an illegal contract. To this end, the courts in Montana normally will strike down the entire loan agreement if such a personal loan agreement is determined to contain an illegal rate of interest.
In some instances, criminal sanctions can be imposed in Montana if an individual engages in an ongoing pattern and practice of charging usurious rates of interests in loans to other individuals. Such conduct normally is known amongst the general population as loan sharking. A person who does engage in such activity faces both fines and jail time if a conviction ensues from such activity.
Moreover, there are completely separate statutory schemes that set permissible interest rates associated with loans from state chartered lending institutions and from some other types of financial services companies. Generally, these enterprises have a bit more leeway when it comes to the interest rates that they are able to charge. The reason for this is the fact that these enterprises are more closely and tightly regulated than are individuals who may be involved in making personal loans -- individuals who are subject to the usury restrictions mandated by Montana statutes. Statutes governing usury in Montana can be found at Montana Code Annotated Title 31.
Nothing in this article should be considered legal advice. If you have questions about usury laws in Montana, see a lawyer.
Keep in mind that while we work hard to keep the information in this article current, the laws governing usury in Montana are subject to change.