Is there a maximum Interest Rate % an individual can charge on a loan in Oregon for investment property? Do usary laws apply?

Asked over 5 years ago - Roseburg, OR

The individual charged 15% interest for a 1 year loan with an option to renew and required he have an option to purchase a lot for a substantially discounted amount. When the note became due he charged an additional 2% to renew at a continued rate of 15%. He also took a Deed of Trust on other piece of property in CA as well.

Attorney answers (1)

  1. Susanne Marie Feigum

    Contributor Level 10

    Answered . http://www.leg.state.or.us/ors/082.html

    9% is the rate if there is no agreement.

    Additional guidance may be found here:

    http://www.usurylaw.com/state/oregon.php

    "Oregon has established a tiered structure in its statutes when it comes to usury laws in that state. The general usury rate for personal loans in Oregon that are below $50,000 is 12%. In the alternative, the usury rate for personal loans made in Oregon can be set at 5% above the discount rate for commercial paper.

    There is some lack of clarity as to how interest rates on personal loans over $50,000 will be handled when it comes to the usury ceiling. Some people maintain that because there is a lack of specificity in the statutes in the state, a person making such a loan should either follow the general usury rate limitation tiers as set forth for lower dollar loans. In the alternative, some would advise defaulting to the general legal interest rate that has been established in the state, which is 9%.

    Using the 9% interest rate for loans -- personal loans -- above $50,000 will work to allow a person to avoid running into usury related issues and problems on down the road.

    In Oregon, there are other statutory provisions that govern other types of lending relationships -- including loans that are made by financial institutions that have been chartered in that state. In addition, there is another statutory scheme in place for commercial loans. Generally, there is a wider range of interest rate options -- including higher interest rates -- available when a loan is made for a commercial transaction.

    Statutory provisions governing usury rates for personal loans can be found at Oregon Revised Statutes in Title 8.

    Generally speaking, a loan agreement that does not comport with the statutory provisions governing usury limits will be refashioned by the court in many instances. In other words, the interest rate will be lowered downward into an appropriate range and the loan agreement otherwise enforced. On the other hand, there are some instances in which a court will strike down a loan with an inappropriate interest rate all together as being illegal and unenforceable.

    Keep in mind that nothing in this article should be construed to be legal advice. If you have any questions in regard to the information set forth in this article, you should consult with an attorney. Finally, while we do make every effort to keep the material in this article up to date, the laws governing usury in Oregon are subject to change. "

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