Rhode Island Usury Laws
Usury laws have been designed primarily to protect consumers in personal loan transactions from being subjected to interest rates that are egregious. In this regard, these laws set maximum levels of interest that can be charged to a consumer in a personal loan.
In Rhode Island, there are two separate scheme for usurious interest rates. First, the general usury limit has been set at 21%. An alternative scheme for establishing the usury limit in Rhode Island sets the usury limit at the rate charged for T-Bills on the date the loan agreement is entered into plus 9%.
Rhode Island law permits either of these two interest rate establishment schemes to be used. There is no requirement that the lesser percentage be used. In other words, lenders and borrowers have some ability to negotiate between themselves which of these two rates of interest they want to utilize in a particular transaction.
In regard to enforcement of loan agreements that have interest provisions in excess of either of the schemes referenced in this article, there are two approaches to such a problem or situation. First of all, there are instances in which a court will deem a contract that contains interest in excess of illegal in its entirety. In this regard, a court will strike down such an agreement and will not enforce any of its provisions.
On the other hand, there are instances in which a court will reform a contract that has a provision for excess interest. In this way, the agreement will be enforced overall -- but with a revised interest rate at a legally permissible level.
The statutes regarding usury limitations in Rhode Island can be found at Rhode Island General Laws, Titles 6 and 6A. There are other statutory provisions that govern other types of lending practices in the state, including commercial loans and loans provided by state chartered financial institutions.
If you have any questions pertaining to usury limits in Rhode Island after reading this article, you need to consult with a qualified lawyer. Additionally, keep in mind that the usury laws in Rhode Island 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.