Arkansas Usury Laws
At the present time, the State of Arkansas arguably has one of the less favorable consumer standards when it comes to usury laws that are in effect and in force in that state at the present time. Currently, the statutes and regulations in Arkansas (as will be discussed more fully in a moment) allow for higher interest rates on personal loans than do most state in the country. Some people do argue conversely that the higher interest rates permitted on personal loans has opened up the lending market more broadly and widely to individuals who otherwise would not be able to obtain personal loan financing otherwise.
In any case, the consumer or personal loan general usury interest rate limitation in Arkansas at this time is 17%. For non-consumers, the interest rate limitation is set at 5% above the Federal Prime Rate. Interestingly, considering present market conditions (indeed, market conditions that have been prevalent for some time) the commercial or non-consumer interest rate cap in Arkansas actually is lower than what certain lenders can charge on personal or consumer loans.
In Arkansas, even interest rates on judgments can be below the usury limitation rate of 17%. The interest rate on judgments in Arkansas is 10% or the agreed upon interest rate -- whichever is greater. Therefore, there are many different legal actions brought in Arkansas with the intent to enforce personal loans that have gone in to default and that do have interest rates pegged above the 15% per annum threshold.
If suit is brought pertaining to a personal loan in default with interest rates in excess of that established by statute, some courts in Arkansas will refashion the initial loan agreement to bring the interest rate downward and into statutory compliance and then will enforce the loan agreement as reformed by the court. In other instances, depending on the prevailing circumstances, a court might declare the contract illegal per se and not enforce it on any level.
Of course, you do need to bear in mind that the laws that currently are on the books in Arkansas governing interest rates on loans can and do change from time to time. While we endeavor to keep all information contained in this article current, we cannot absolutely guarantee accuracy. Primary source material for prevailing usury laws in Arkansas can be found within the Arkansas Code, as amended.
Additionally, through this informational article we are not providing you legal advice. If you have any additional questions regarding the issues discussed in this article, you need to contact an attorney with experience in usury law issues.