Maximum Interest Rates for Private Loans: 50-State Guide (2026)

What's the maximum interest rate you can charge on a personal loan? This state-by-state guide covers usury laws across all 50 states.

Maximum Interest Rates for Private Loans: 50-State Guide (2026)

What's the maximum interest rate you can charge on a personal loan? This state-by-state guide covers usury laws across all 50 states.

Every state has usury laws that limit how much interest lenders can charge. If you're lending money privately - to a friend, family member, or anyone else - you need to know these limits.

Charging more than the legal maximum can void your loan, cost you the interest, and even result in penalties.

Understanding Usury Laws

Usury = charging illegally high interest rates

Usury laws exist to protect borrowers from predatory lending. They set maximum rates that lenders can charge.

Key Distinctions

50-State Usury Rate Chart

Here are the maximum interest rates for unlicensed individual lenders in each state:

Lowest Maximum Rates (Under 10%)

Moderate Rates (10-18%)

Higher Rates (18%+)

States With No Usury Limit

These states have no usury cap for most consumer loans:

1. Colorado (high cap, not no limit - 45%) 2. Nevada 3. New Hampshire 4. South Dakota 5. Utah 6. Wisconsin

Note: Even in these states, federal laws and other regulations may apply to certain loan types.

California Deep Dive

California is home to many JimBondy users, so here's detailed information:

The 10% Rule

California's Constitution (Article XV) limits interest to 10% per year for:

- Loans primarily for personal, family, or household purposes - Made by non-exempt lenders

What "10% Per Year" Means

California Exemptions

The 10% cap does NOT apply to:

- Banks and credit unions - Licensed finance lenders (CFL holders) - Real estate brokers arranging loans secured by real property - Loans to corporations - Business loans over $300,000

Penalties for Violating California Usury Law

If you charge more than 10%:

New York Deep Dive

New York has civil and criminal usury thresholds:

This is why many credit card companies are based in Delaware or South Dakota - to avoid New York's strict limits.

Texas Deep Dive

Texas usury law is complex:

Texas also allows higher rates for certain loan types with proper licensing.

How Interest Is Calculated

When determining if you're within usury limits, understand how interest is calculated:

Simple Interest Interest charged only on principal.

Formula: Principal × Rate × Time

Example: $10,000 × 10% × 1 year = $1,000

Compound Interest Interest charged on principal + accumulated interest.

More complex - can effectively raise the rate above stated percentage.

Points and Fees Some states include origination fees, points, and other charges in the usury calculation. A loan at 8% with 5 points might violate a 10% usury limit.

Practical Tips

For Lenders

1. Know your state's limit before agreeing to terms 2. Don't include fees that push you over the limit 3. Document the rate clearly in writing 4. Use a tracking system like JimBondy to maintain clear records

For Borrowers

1. Know your rights - you can void usurious loans 2. Check the math - verify the rate is calculated correctly 3. Get terms in writing - verbal agreements are harder to enforce 4. Report illegal lenders to your state's consumer protection office

Frequently Asked Questions

Q: Can I charge any rate if both parties agree? A: No. Usury laws apply regardless of agreement. A contract to pay 50% interest in California is unenforceable.

Q: Do usury laws apply to business loans? A: Often no or higher limits apply. Many states exempt business loans entirely.

Q: What about loans between family members? A: Same rules apply. Family loans are still subject to usury limits.

Q: Can I charge "late fees" instead of interest? A: Courts often view excessive late fees as disguised interest and may apply usury laws.

Using JimBondy

JimBondy helps you:

- Track the agreed interest rate - documented and shared - Calculate payments - clear records of what's owed - Export statements - proof of terms for both parties - Stay organized - no confusion about rates or balances

Disclaimer

This guide is for informational purposes only. Usury laws change and have many exceptions. Always consult a licensed attorney in your state before lending money at interest.

Last updated: March 2026