New York Interest Rate Laws


Section 5-501 of General Obligations Law and Section 14a of Banking Law provided under New York Consolidated Law Service govern the interest rate in the state of New York.  The maximum rate of interest permissible under these provisions is sixteen percent (16 %) per annum.  Usurious contracts for a higher rate of interest are void pursuant to Section 5-511 of the General Obligations Law.  A person paying such usurious amount, to a savings bank, a savings and loan association or a federal savings and loan association, can recover twice the entire amount of the interest thus paid.  The entire interest received will also be forfeited at the same time.  By the authority of Section 5-513, the money paid in excess of the legal rate of interest can be recovered by the person who paid such an amount.

An unauthorized person charging or receiving usurious interest at a rate exceeding twenty-five percent (25 %) per annum or the equivalent rate will be guilty of criminal usury in the second degree, under Section 190.40 of Penal Law provided in New York Consolidated Law Service.  Criminal usury in the second degree is a class E felony.

Under Section 5004 of Civil Practice Law and Rules, the rate of interest on money judgments is nine percent (9 %) per annum.  Pursuant to Section 5003, interest is computed from the date of entry of such judgment.  The same conduct will become criminal usury in the first degree if the person charging or receiving such money had been previously convicted of the crime of criminal usury or attempted to commit such crime, or his/her conduct was part of a scheme or business of making or collecting usurious loans.  The provision for criminal usury in the first degree is provided in Section 190.42 and this is a class C felony.

Some of the exceptions to the usury limit are provided in Section 5-501.  They are:

  1. Any loan or forbearance insured by the federal housing commissioner or for which a commitment to insure has been made by the federal housing commissioner or to any loan or forbearance insured or guaranteed pursuant to the provisions of Servicemen’s Readjustment Act of 1944.
  2. Any loan or forbearance in the amount of two hundred fifty thousand dollars or more, other than a loan or a forbearance secured primarily by an interest in real property improved by a one or two family residence.
  3. Any loan or forbearance in the amount of two million five hundred thousand dollars or more.

Additionally, Section 5-525 of the General Obligations Law exempts debit balance on customer accounts with a registered broker or dealer, from the usury laws of New York.

NY CLS Gen Oblig § 5-501

Rate of interest; usury forbidden
1. The rate of interest, as computed pursuant to this title, upon the loan or forbearance of any money, goods, or things in action, except as provided in subdivisions five and six of this section or as otherwise provided by law, shall be six per centum per annum unless a different rate is prescribed in section fourteen-a of the banking law.
2. No person or corporation shall, directly or indirectly, charge, take or receive any money, goods or things in action as interest on the loan or forbearance of any money, goods or things in action at a rate exceeding the rate above prescribed. The amount charged, taken or received as interest shall include any and all amounts paid or payable, directly or indirectly, by any person, to or for the account of the lender in consideration for making the loan or forbearance as defined by the banking board pursuant to subdivision three of section fourteen-a of the banking law except such fee as may be fixed by the commissioner of taxation and finance as the cost of servicing loans made by the property and liability insurance security fund.
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5. No law regulating the maximum rate of interest which may be charged, taken or received shall apply to any loan or forbearance insured by the federal housing commissioner or for which a commitment to insure has been made by the federal housing commissioner or to any loan or forbearance insured or guaranteed pursuant to the provisions of an act of congress entitled “Servicemen’s Readjustment Act of 1944.”
6. a. No law regulating the maximum rate of interest which may be charged, taken or received, except section 190.40 and section 190.42 of the penal law, shall apply to any loan or forbearance in the amount of two hundred fifty thousand dollars or more, other than a loan or a forbearance secured primarily by an interest in real property improved by a one or two family residence. A loan of two hundred fifty thousand dollars or more which is to be advanced in installments pursuant to a written agreement by a lender shall be deemed to be a single loan for the total amount which the lender has agreed to advance pursuant to such agreement on the terms and conditions provided therein.
b. No law regulating the maximum rate of interest which may be charged, taken or received, including section 190.40 and section 190.42 of the penal law, shall apply to any loan or forbearance in the amount of two million five hundred thousand dollars or more. Loans or forbearances aggregating two million five hundred thousand dollars or more which are to be made or advanced to any one borrower in one or more installments pursuant to a written agreement by one or more lenders shall be deemed to be a single loan or forbearance for the total amount which the lender or lenders have agreed to advance or make pursuant to such agreement on the terms and conditions provided therein.
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NY CLS Bank § 14-a

Rate of interest; banking board to adopt regulations
1. The maximum rate of interest provided for in section 5-501 of the general obligations law shall be sixteen per centum per annum.

NY CLS Gen Oblig § 5-511

Usurious contracts void
1. All bonds, bills, notes, assurances, conveyances, all other contracts or securities whatsoever, except bottomry and respondentia bonds and contracts, and all deposits of goods or other things whatsoever, whereupon or whereby there shall be reserved or taken, or secured or agreed to be reserved or taken, any greater sum, or greater value, for the loan or forbearance of any money, goods or other things in action, than is prescribed in section 5-501, shall be void, except that the knowingly taking, receiving, reserving or charging such a greater sum or greater value by a savings bank, a savings and loan association or a federal savings and loan association shall only be held and adjudged a forfeiture of the entire interest which the loan or obligation carries with it or which has been agreed to be paid thereon. If a greater sum or greater value has been paid, the person paying the same or his legal representative may recover from the savings bank, the savings and loan association or the federal savings and loan association twice the entire amount of the interest thus paid.

NY CLS Gen Oblig § 5-513

Recovery of excess
Every person who, for any such loan or forbearance, shall pay or deliver any greater sum or value than is allowed to be received pursuant to section 5-501, and his personal representatives, may recover in an action against the person who shall have taken or received the same, and his personal representatives, the amount of the money so paid or value delivered, above the rate foresaid.

NY CLS CPLR § 5003

Interest upon judgment
Every money judgment shall bear interest from the date of its entry. Every order directing the payment of money which has been docketed as a judgment shall bear interest from the date of such docketing.

NY CLS CPLR § 5004

Rate of interest
Interest shall be at the rate of nine per centum per annum, except where otherwise provided by statute.

NY CLS Gen Oblig § 5-525

Interest charged by a registered broker or dealer for carrying debit balances
Interest charged by a broker or dealer registered under the securities exchange act of nineteen hundred thirty-four, as amended, for carrying a debit balance including a debit balance arising out of a non-purpose loan, in an account for a customer shall not be subject to the limitations of this title, including the limitations contained in subdivision two of section 5-527 of this title, if such debit balance is payable on demand and secured by securities or commodities upon which credit can be extended by a broker or dealer, and if, on the date when the interest is charged or accrued, such interest is not greater than eight percentage points above the prime rate. For the purposes of this section, the prime rate shall equal the average prime rate on short term business loans which is published by the board of governors of the federal reserve system for the most recent week which was publicly available from the board of governors of the federal reserve system on the previous business day.

NY CLS Penal § 190.40

Criminal usury in the second degree
A person is guilty of criminal usury in the second degree when, not being authorized or permitted by law to do so, he knowingly charges, takes or receives any money or other property as interest on the loan or forbearance of any money or other property, at a rate exceeding twenty-five per centum per annum or the equivalent rate for a longer or shorter period.
Criminal usury in the second degree is a class E felony.

NY CLS Penal § 190.42

Criminal usury in the first degree
A person is guilty of criminal usury in the first degree when, not being authorized or permitted by law to do so, he knowingly charges, takes or receives any money or other property as interest on the loan or forbearance of any money or other property, at a rate exceeding twenty-five per centum per annum or the equivalent rate for a longer or shorter period and either the actor had previously been convicted of the crime of criminal usury or of the attempt to commit such crime, or the actor’s conduct was part of a scheme or business of making or collecting usurious loans.
Criminal usury in the first degree is a class C felony.