Louisiana Usury Laws
Louisiana has one of the more comprehensive usury statutes on the books anywhere in the United States. Louisiana has established a legal rate of interest that can be no more than one point over the Federal Prime Rate. However, the legal rate of interest in Louisiana, while tied to the Prime Rate, cannot exceed 14% nor can it drop below 7%.
With all of this said, the maximum usury limit for personal loans to individuals in Louisiana is 12%. The higher level is intended for corporations, for loans to corporations. The usury law limitations in Louisiana cannot be avoided by establishing a corporation when the loan actually is going to be made to an individual. Sham corporations established for the purposes of avoiding the application of the usury laws are illegal in Louisiana.
Louisiana is one of only a few state that actually establishes a minimum interest rate for personal or consumer loans. Throughout the United States, usury laws are those laws that have been established by the various states and that are designed to set forth a maximum legal interest rate, a maximum allowable interest rate for certain types of loans.
Generally speaking the Federal government has stayed out of the regulation of interest rates on what it considers purely private transactions. Arguably, the U.S. government would have the legal and Constitutional ability to intervene through the Commerce Clause of the U.S. Constitution -- but, historically, has chosen and elected not to do so. The only area in which the U.S. government has exercised any involvement in interest rates is in cases involving loans made through Federally charted banks and savings and loans, financial entities over which the U.S. government has exclusive regulatory authority at this point in time.
The statutory provisions governing appropriate interest rates in Louisiana are codified at Louisiana Revised Statutes chapters six and nine. Chapter six sets forth those instances in which the usury laws of Louisiana are not applicable. Conversely, chapter nine sets forth those instances in which the usury laws of the State of Louisiana are, in fact, applicable.
Keep in mind that this article has been created for informational purposes only. If you have any questions about usury laws in Louisiana, you should contact an experienced lawyer. Moreover, the usury laws in Louisiana are subject to change from time to time. While we make every effort to keep the information in this article current and accurate, we cannot guarantee the same because of the manner in which laws do change.