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Hawaii Interest Rate Laws

Hawaii interest rate laws are stated in Hawaii Revised Statutes, Division 2(Business), Title 26 (Trade Regulation and Practice), Chapter 478 (Interest and Usury).  Under Section 478-2 the state legal maximum interest rate is ten percent per annum.  According to Section 478-3, interest rate on judgments is also ten percent per annum.

Charging higher interest rate than the state legal maximum interest is usury.  Under Section 478-5, usurious interests are not enforceable.  In suits involving usurious interest transactions, the creditor will not be allowed to recover the interest charged in excess.  The debtor will be granted the litigation cost.  Under Section 478-6, criminal penalty up to $250 or imprisonment up to one year, or both penalty and imprisonment may be imposed on a person found guilty of usury.

Section 412:9-302 has exempted financial service loan companies, and Section 412:10-403 has exempted credit unions from the state prescribed interest rate.  These institutions are permitted to charge a different rate of interest prescribed by respective statutes.

HRS § 478-2 reads:

“§ 478-2.  Legal rate; computation.
  When there is no express written contract fixing a different rate of interest, interest shall be allowed at the rate of ten per cent a year, except that, with respect to obligations of the State, interest shall be allowed at the prime rate for each calendar quarter but in no event shall exceed ten per cent a year, as follows:
   (1) For money due on any bond, bill, promissory note, or other instrument of writing, or for money lent, after it becomes due;
   (2) For money due on the settlement of accounts, from the day on which the balance is ascertained;
   (3) For money received to the use of another, from the date of a demand made; and
   (4) For money upon an open account, after sixty days from the date of the last item or transaction.”

HRS § 478-5 reads:

 “§ 478-5.  Usury not recoverable.
  If a greater rate of interest than that permitted by law is contracted for with respect to any consumer credit transaction, any home business loan or any credit card agreement, the contract shall not, by reason thereof, be void. But if in any action on the contract proof is made that a greater rate of interest than that permitted by law has been directly or indirectly contracted for, the creditor shall only recover the principal and the debtor shall recover costs. If interest has been paid, judgment shall be for the principal less the amount of interest paid. This section shall not be held to apply, to loans made by financial services loan companies and credit unions at the rates authorized under and pursuant to articles 9 and 10 of chapter 412.”

HRS § 478-6
 “§ 478-6.  Usury; penalty.
  Any person who directly or indirectly receives any interest or finance charge at a rate greater than that permitted by law or who, by any method or device whatsoever, receives or arranges for the receipt of interest or finance charge at a greater rate than that permitted by law on any credit transaction shall be guilty of usury and shall be fined not more than $250, or imprisoned not more than one year, or both.”

Inside Hawaii Interest Rate Laws