Louisiana Interest Rate Laws

Rates of interest in the state of Louisiana are governed by laws prescribed in Title 9, Code Title 12 of Loan, Chapter 1 of Section 9:3500.  Under this Section, the rate of interest cannot exceed 12 percent per annum.  Pursuant to section 9:3501 any contract agreed between the parties for the payment of usurious interest will result in forfeiture of the entire interest so contracted.  Furthermore, under Section 9:3500 if a person contracts to pay a higher rate of interest than prescribed by law, such person can recover those amounts within two years from the time of making such payment.

Pursuant to Section 13:4202 of Title 13, the rate of judicial interest resulting from a lawsuit should be equal to the rate as published annually by the Commissioner of Financial Institutions on or after January 1, 2002.  The Commissioner of Financial Institutions should ascertain the Federal Reserve Board of Governors approved “discount rate”.  The effective judicial interest rate for the calendar year following the calculation date shall be three and one-quarter percentage (3¼ %) points above the discount rate as ascertained by the Commissioner.

Certain types of transactions exempt from the application of the laws on usury are:

  1. Pursuant to Section 9:3504, an obligation secured directly or indirectly by a mortgage on immovable property is exempted from the application of the laws on usury and interest upon interest is not greater than the rate of interest lawfully allowed in a conventional mortgage.
  2. Pursuant to Section 9:3509, any person, corporation, partnership, other limited liability corporations or partnerships borrows funds for commercial, business, or agricultural purposes may agree to pay interest in excess of the maximum rate of conventional interest authorized by the laws of this state.
  3. Pursuant to Section 9:3504, the interest rate may be in excess of the maximum rate of conventional interest authorized by law to any obligation secured by mortgage.

La. R.S. 9:3500

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C. (1) The amount of the conventional interest cannot exceed twelve percent per annum. The same must be fixed in writing; testimonial proof of it is not admitted in any case.

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(4) (a) The owner of any promissory note, bond, or other written evidence of debt for the payment of money to order or bearer or transferable by assignment shall have the right to collect the whole amount of such promissory note, bond, or other written evidence of debt for the payment of money, notwithstanding such promissory note, bond, or other written evidence of debt for the payment of money may include a greater rate of interest or discount than twelve percent per annum; such obligation shall not bear more than twelve percent per annum after maturity until paid.

La. R.S. 9:3501

Forfeiture of interest
Any contract for the payment of interest in excess of that authorized by law shall result in the forfeiture of the entire interest so contracted.

La. R.S. 9:3500

Rates of legal and conventional interest; usury
A. Interest is either legal or conventional.
B. Legal interest is fixed at the following rates, to wit:
(1) At the rate fixed in R.S. 13:4202 on all sums which are the object of a judicial demand, whence this is called judicial interest; and
(2) On sums discounted at banks at the rate established by their charters.
C. (1) The amount of the conventional interest cannot exceed twelve percent per annum. The same must be fixed in writing; testimonial proof of it is not admitted in any case.
(2) Except in the cases herein provided, if any person shall pay on any contract a higher rate of interest than the above, as discount or otherwise, the same may be sued for and recovered within two years from the time of such payment.
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La. R.S. 13:4202

B. (1) On and after January 1, 2002, the rate shall be equal to the rate as published annually, as set forth below, by the commissioner of financial institutions. The commissioner of financial institutions shall ascertain, on the first business day of October of each year, the Federal Reserve Board of Governors approved “discount rate” published daily in the Wall Street Journal. The effective judicial interest rate for the calendar year following the calculation date shall be three and one-quarter percentage points above the discount rate as ascertained by the commissioner.
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La. R.S. 9:3504

B. Notwithstanding any other law to the contrary, particularly but not exclusively Articles 1939 and 2924 of the Louisiana Civil Code, an obligation secured directly or indirectly, in whole or in part, by a mortgage on immovable property of the form commonly known as a “wrap-around” mortgage shall be exempt from the application of the laws on usury and interest upon interest if the nominal interest of the wrap-around mortgage is not greater than the rate of interest lawfully allowed in a conventional mortgage.
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La. R.S. 9:3509

Notwithstanding any other provisions of the law of this state to the contrary, any debtor that is a domestic corporation, a limited liability company formed pursuant to the laws of this or any other state, a foreign corporation, a partnership in commendam formed pursuant to the laws of this state, a registered limited liability partnership formed pursuant to the laws of this or any other state, a foreign limited partnership, or a partnership in which all of the partners are either corporations, limited liability companies formed pursuant to the laws of this or any other state, foreign limited partnerships, partnerships in commendam, or partnerships comprised of corporations, foreign limited partnerships, or partnerships in commendam, or registered limited liability partnerships formed pursuant to the laws of this or any other state, or ordinary partnership or any other person or individual borrowing funds for commercial, business, or agricultural purposes or deferring payment of an obligation for commercial, business, or agricultural purposes, may agree to pay interest in excess of the maximum rate of conventional interest authorized by the laws of this state, whether in connection with unsecured or secured indebtedness and whether the secured indebtedness is secured, in whole or in part, directly or indirectly, by a real estate mortgage or chattel mortgage on property in this state or is otherwise secured, and as to any such agreement such debtor shall be prohibited from asserting a claim or defense of usury or of the taking of interest in excess of the maximum rate of conventional interest, and any person whatsoever signing as co-maker, guarantor, or endorser for such debtor shall also be prohibited from asserting any such claim or defense. The term “foreign limited partnership”, as used hereinabove, shall mean any partnership domiciled in any state of the United States, other than Louisiana or the District of Columbia, which shall have been formed and is existing pursuant to the limited partnership law or Uniform Limited Partnership Law of any such state, and such partnership need not qualify as a partnership in commendam under the laws of this state.

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Inside Louisiana Interest Rate Laws