Alabama governs interest rates in the state under Title 8 (Commercial Law and Consumer Protection), Chapter 8 (Interest and Usury) of the Alabama Code.  Section 8-8-1 prescribes the maximum rate of interest upon a loan or forbearance of money, goods, or things in action as $6 upon $100 for one year.  The rate of interest upon a written contract is $8 upon $100 for one year on any amount of money for any period of time.

According to Section 8-8-12, contracts for payment of interest at a higher rate than prescribed by law are usurious and cannot be enforced except as to the principal.  A person borrowing at a usurious rate of interest shall not be required to pay more than the principal sum borrowed.  Pursuant to Section 8-8-10, the rate of interest upon a judgment rendered, on a contract action, for the payment of money shall be at the same rate of interest as stated in said contract.  Such judgments bear interest from the day of the cause of action.  All other judgments, not based upon contract actions, shall carry an interest rate of 12 percent per annum.

Certain types of transactions and entities are exempt from the state law on usury and interest rates.  State Board of Education and the trustees of all state institutions have an exemption to the prescribed limit of statutory rate of interest fixed in Section 8-8-1.  Under Section 8-8-4, when borrowing money in amounts not less than $100,000, they may agree on rates of interest not exceeding 15 percent per annum.  Under Section 8-8-5, rates of interest may be fixed by any person, corporation, partnership or association, regardless of the statutorily prescribed limit of interest rates, when the original principal balance of the loan or forbearance of money or credit sales is not less than $2000.

Under Section 8-8-6, debts or extension of credits under the National Housing Act or veterans’ benefits are exempt from any usury law or law prescribing or limiting interest rates in the state of Alabama.  Bonds, notes, warrants, or securities issued by the State of Alabama or any of the state department, agency, or instrumentality or by any non-profit organization in the state are exempted, under Section 8-8-7, from all usury laws or laws prescribing or limiting interest rates in the state.  Likewise, Section 11-54-97 of the Code of Alabama exempts industrial development boards and Section 11-58-15 exempts medical clinic boards from such laws.  Public housing bonds issued by the Municipal Housing Authorities in Alabama are exempt, pursuant to Section 24-1-32, from usury and interest rate laws in the state.  Section 16-3-28 exempts securities issued by the State Board of education and Section 22-21-6 exempts bonds, notes and other securities issued by any public hospital corporation from such laws in Alabama.

Code of Ala. § 8-8-1

Maximum rate of interest; generally.
Except as otherwise provided by law, the maximum rate of interest upon the loan or forbearance of money, goods, or things in action, except by written contract is $6 upon $100 for one year, and the rate of interest by written contract is not to exceed $8 upon $100 for one year and at that rate for a greater or less sum or for a longer or shorter time.

Code of Ala. § 8-8-12

Usurious rate of interest; enforcement; deduction; principal.
(a) Except as otherwise permitted by law, all contracts for the payment of interest upon the loan or forbearance of goods, money, things in action, or upon any contract whatever at a higher rate than is prescribed in this chapter are usurious and cannot be enforced except as to the principal.
(b) The borrower of money at a usurious rate of interest shall not in any case be required to pay more than the principal sum borrowed, and if any interest has been paid, the same must be deducted from the principal and judgment entered for the balance only; provided, however, that the defense of usury may not be pleaded against a holder in due course of any negotiable instrument.

Code of Ala. § 8-8-10

Rate of interest; judgments for money; fees.
Judgments for the payment of money, other than costs, if based upon a contract action, bear interest from the day of the cause of action, at the same rate of interest as stated in said contract; all other judgments shall bear interest at the rate of 12 percent per annum, the provisions of Section 8-8-1 to the contrary notwithstanding; provided, that fees allowed a trustee, executor, administrator, or attorney and taxed as a part of the cost of the proceeding shall bear interest at a like rate from the day of entry.

Code of Ala. § 8-8-4

Rate of interest; state educational institutions.
(a) The State Board of Education and the trustees of all state institutions where education is a part of the program of the institution as referred to in Section 16-3-28, when borrowing money in amounts of not less than $100,000, may agree to pay such rate or rates of interest not to exceed a rate of 15 percent per annum for the loan or forbearance of money as such board of education or trustees may determine, notwithstanding any law of this state otherwise prescribing or limiting such rate or rates of interest.
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Code of Ala. § 8-8-5

Rate of interest; original principal balance not less than $2000.
(a) Any person or persons, corporations, trust, general partnership or partnerships, limited partnership or partnerships, or association may agree to pay such rate or rates of interest for the loan or forbearance of money and for any credit sales as such person, corporation, trust, general partnership, limited partnership, or association may determine, notwithstanding any law of this state otherwise prescribing or limiting such rate or rates of interest; provided, that the original principal balance of the loan or forbearance of money or credit sales is not less than $2,000; provided further, that all laws relating to unconscionability in consumer transactions including but not limited to the provisions of Chapter 19 of Title 5, known as the Mini-Code, shall apply to transactions covered by this section.

Code of Ala. § 8-8-6

Debts; extensions of credit; veterans’ benefits; National Housing Act.

(a) All debts or extensions of credit incurred pursuant to any provision of the act of Congress known as the National Housing Act, as the same now exists or may hereafter be amended or supplemented, and all debts or extensions of credit incurred pursuant to any act of Congress relating to veterans’ benefits, as the same now exists or may hereafter be amended or supplemented, are exempt from any law of this state relating to usury or prescribing or limiting interest rates.
(b) The provisions of this section are remedial and supersede the provisions of any other act limiting interest rates in any way contrary to the provisions hereof.

Code of Ala. § 8-8-7

Exemptions; departments, agencies, municipalities or instrumentalities of the State.
Any bonds, notes, warrants, other evidences of indebtedness, or securities issued by the State of Alabama or any department, agency, or instrumentality thereof, by any not-for-profit public or private corporation at any time organized or created pursuant to act of the legislature or executive order of the Governor for the purpose of acting as an instrumentality of the State of Alabama or otherwise acting in the public interest and by any board of water and sewer commissioners created under the provisions of Article 10, Chapter 50, Title 11, and authorized to issue bonds under Section 11-50-345 by any municipality, by any county, by any public corporation heretofore or hereafter organized or created in the State of Alabama pursuant to authorization, determination, finding, or other action of any municipality or municipalities or county or counties or the governing body of any one or more thereof, or by any city or county board of education, are hereby exempted from all laws of the State of Alabama governing usury or prescribing or limiting interest rates, including, without limitation, the provisions of this chapter.

Code of Ala. § 11-54-97

Exemption from usury and interest laws.
Each industrial development board now or hereafter organized under the provisions of this division is hereby exempted from the laws of the State of Alabama governing usury or prescribing or limiting interest rates, including, without limitation, the provisions of Chapter 8 of Title 8.

Code of Ala. § 11-58-15

Exemption from usury and interest rate laws.
Each medical clinic board now or hereafter organized under the provisions of this chapter, as amended, is hereby exempted from the laws of the State of Alabama governing usury or prescribing or limiting interest rates, including, without limitation, the provisions of Chapter 8 of Title 8.

Code of Ala. § 24-1-32

Bond issues; generally.
The bonds of the authority shall be authorized by its resolution and shall be issued in one or more series and shall bear such date or dates, mature at such time or times, not exceeding 60 years from their respective dates, bear interest at such rate or rates, per annum payable semiannually, be in such denominations, which may be made interchangeable, be in such form, either coupon or registered, carry such registration privileges, be executed in such manner, be payable in such medium of payment, at such place or places, and be subject to such terms of redemption, with or without premium, as such resolution or its trust indenture or mortgage may provide.

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Code of Ala. § 16-3-28

Additional powers.

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(2) To sell and issue interest-bearing securities, whether in the form of bonds, notes or other securities, in evidence of the moneys so borrowed;
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(b) The securities issued under the provisions of this section may from time to time be refunded by the issuance, by sale or exchange, of refunding bonds, notes or other securities payable from the same or different sources for the purpose of paying all or any part of the principal of the securities to be refunded, any redemption premium required to be paid as a condition to the redemption prior to maturity of any such securities that are to be so redeemed in connection with such refunding, any accrued and unpaid interest on the securities to be refunded, any interest to accrue on each security to be refunded to the date on which it is to be paid, whether at maturity or by redemption prior to maturity, and the expenses incurred in connection with such refunding; provided, that unless duly called for redemption pursuant to their provisions, the holders of any such securities then outstanding and proposed to be refunded shall not be compelled without their consent to surrender their outstanding securities for such refunding. Any such securities may be issued from time to time, may be executed in such manner, shall bear interest at such rate or rates, shall be payable as to both principal and interest, at such time or times, may be made redeemable before maturity at the option of the issuing body at such redemption price or prices and on such terms, and may be sold in such manner and at such price or prices, all as may be provided in the proceedings under which they are issued. The State Board of Education or other governing body providing for the issuance of such securities shall have power to prescribe all details thereof, subject only to the provisions of this section. Bonds, notes and other securities issued under the provisions of this section shall be eligible for the investment of trust or other fiduciary funds in the exercise of prudent judgment by those making such investment. Neither the securities issued under, nor any pledge or agreement that may be made pursuant to, the provisions of this section shall be or constitute an obligation of any nature whatsoever of the state, and neither the said securities nor any obligation arising from any such pledge or agreement shall be payable out of any moneys appropriated by the state to the institution with respect to which such securities are issued or such pledge or agreement is made.

Code of Ala. § 22-21-6

Usury exemptions.
(a) Bonds, notes and other securities issued by any public hospital corporation are hereby exempted from all laws of the state governing usury or prescribing or limiting interest rates, including, without limitation, the provisions of Chapter 8 of Title 8 of this Code.