West Virginia Usury Laws
West Virginia actually has one of the more complicated schemes pertaining to lawful interest rates that can be found in many other states in the country. First of all, it is important to realize that West Virginia has established a generally legal interest rate of 6% on many types of loans.
While 6% is the generally allowable interest rate on many types of loans in West Virginia, the state actually sets what it calls a maximum contractual rate at 8%. This is akin to what many states do call a usury cap or usury limitation.
There are other rules and regulations associated with other types of financing and lending in West Virginia. For example, the West Virginia Commissioner of Banking has the power to issue interest rates for real estate loans. Through this authority, the Commissioner is said to also have the power to establish maximum general usury limitations based on market rates when it comes to other types of financing in the state.
In most other states in the country there is not so much flexibility when it comes to adjusting the rates associated with personal loans made by individuals. Of course, banks adjust their interest rates according to the Prime Rate as established by the Federal Reserve. However, in this instance, the Banking Commissioner in West Virginia is vested with more power pertaining to the interest rates associated with certain loans that can be found vested in the offices of similar governmental officials in other states.
The statutes governing lending practices and interest rates in West Virginia can be found codified in the West Virginia Code at Chapters 31, 31A, 31B, 31C, 46 and 46A.
If a loan agreement is found to contain an impermissible rate of interest, that agreement likely will be struck down in its entirety as illegal. Illegal contracts simply cannot be enforced. However, there are some limited situations in which a loan agreement that contains interest somewhat above the appropriate level will be reformed allow for the survival of the agreement itself with lowered interest.
Keep in mind that this article is not intended to provide you with legal advice. This article is intended for informational purposes only. Additionally, it is important for you to realize that while we make every effort to keep the information in this article up to date, the laws governing loans, lending practices and usury limitations in West Virginia do change from time to time.