New York Usury Laws
New York has a pretty straightforward usury law on its books at this time. The general usury limit is set at 16% in New York. This is imposed on all personal, consumer loans.
In New York, if a personal loan agreement is crafted that includes an interest rate over and above the usury rate of 16%, there are two possible recourses. First, in many instances, when a personal loan has an interest rate above and beyond the usury cap, the loan agreement itself will be determined to be illegal and voided.
On the other hand, there are instances in which a personal loan agreement with impermissible interest will be reformed to lower the interest rate to an appropriate level. The loan agreement will remain otherwise the same and enforceable.
There are also criminal statutes on the book governing usury violations in certain circumstances. In order to prosecuted under New York criminal law for usury, or loan sharking as it is more commonly known, there really does need to be a pattern of lending to individuals or consumers in violation of the law.
In addition, Federal RICO statutes have been used to prosecute people in New York for serious violation of the usury statutes, for serious cases of loan sharking. Federal prosecutions occur in New York in instances in which a person loan agreement has been entered into that calls for the consumer to pay interest in the amount of twice the usury limit in the state, or in amount of 32% or more.
There are other statutory schemes that cover other lending practices in New York. This includes statutes governing interest that can be charged by state chartered financial institutions such as banks, savings and loans as well as credit unions. In addition, the Uniform Commercial Code governs financing arrangements relating to the sale of goods with a value over $500 in the State of New York.
The general statutes pertaining to usury and related lending matters in New York can be found in the Consolidate Laws of New York in Section DCD.
Keep in mind that this article is not intended to provide legal advice. If you have questions or concerns about usury laws in New York, see a lawyer. Finally, while we make every effort to keep the information in these articles up to day, the usury laws in New York do change from time to time.