New Jersey Usury Laws
Television and motion pictures have fostered an image of New Jersey being the home of crime figures and illicit activities. Indeed, “The Sopranos” is one of the most popular and widely regarded television programs of all time.
Of course, much of what is broadcast and filmed pertaining to life in New Jersey is fanciful. New Jersey is not a state in which a person can find a loan shark on every corner. However, with that said, New Jersey does have some of the most liberal laws in the country when it comes to personal lending practices and usury laws.
In this regard, when it comes to personal loans made from one individual to another, the usury cap is a very high 30% per annum. Loan sharking is subject to Federal RICO laws in most instances. Under RICO, in order for a person to be charged with loan sharking, that person would have be lending money to an individual at a rate twice the usury limit in a particular state. In other words, in order for a person to be charged with being a loan shark in New Jersey under Federal law, that person would have to be charging interest rates of 60% or more per annum -- which is an extraordinary amount.
When it comes to loans made to corporations, the usury limits is 50%. Again, this is one of the highest usury caps to be found anywhere in the United States. There are some exceptions to this law. However, as a general rule, this is the permissible cap on interest rates associated with loans made to corporations.
The statutory provisions governing usury in New Jersey can be found in Title 31 of New Jersey Statutes. The entire Title is dedicated to usury caps and related lending practices.
Generally speaking, a personal or corporate loan that has interest that exceeds the usury limits set forth by statute will be considered an illegal contract. As an illegal contract, it will be voided and considered unenforceable.
If you have any questions pertaining to usury limits in New Jersey after reading this article, you need to consult with a qualified lawyer. Additionally, keep in mind that the usury laws in New Jersey do change from time to time. We work to keep the information in this article up to date. However, with the changes in laws, we cannot always guarantee the accuracy of all of the information contained in this article.