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Maryland Interest Rate Laws

Maryland (“MD”) interest rate laws are generally stated in MD Commercial Law Code, Title 12(Credit Regulation), Subtitle one (Interest and Usury).  However, the state legal maximum interest rate is stipulated in MD Constitution, Article III, Section 57.

Accordingly, the state legal maximum interest rate is six percent per annum in the absence of a written agreement.  If there is a written agreement between the lender and the borrower, under Section 12-103 a lender can charge eight percent interest on the principal amount.  Under Section 11-107, the legal interest rate on the amount of judgment is ten percent per annum.  In contract cases where there is a money judgment the interest rate will continue the same as stipulated in the contract until the date of maturity.

Charging higher interest than the state legal maximum interest is usury.  Under Section 12-114, a person who is found charging usurious interest will have to forfeit three times the usurious interest to the borrower or $500 whichever is greater.

Section 12-103 have exempted Mortgage secured loans, unsecured loans secured by other than savings, and installment loans not secured by real property from the state prescribed interest rate.  Additionally, Section 12-506 has exempted open-end retail accounts, and Sections 12-609, 610 have exempted installment sales contract for motor vehicles, and other consumer goods.

Md. Const. art. III, § 57 reads:

“Section 57. Legal rate of interest  
   The Legal Rate of Interest shall be Six per cent. per annum; unless otherwise provided by the General Assembly.”

 

Md. COMMERCIAL LAW Code Ann. § 12-103 reads in part:
Ҥ 12-103. Other permitted rates of interest; licensing requirements
   (a) Loan under written agreement — Percent maximum. —
   (1) Except as provided in subsections (b), (c), (d), (e), and (f) of this section, a lender may charge interest at an effective rate of simple interest not in excess of 8 percent per year on the unpaid principal balance of a loan if there is a written agreement signed by the borrower which sets forth the stated rate of interest charged by the lender.”

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Md. COMMERCIAL LAW Code Ann. § 12-114 reads in part:
 “§ 12-114. Penalties
   (a) Usury. —
   (1) Any person who violates the usury provisions of this subtitle shall forfeit to the borrower the greater of:
      (i) Three times the amount of interest and charges collected in excess of the interest and charges authorized by this subtitle; or
      (ii) The sum of $ 500.”

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Md. COURTS AND JUDICIAL PROCEEDINGS Code Ann. § 11-107 reads in part:
 “§ 11-107. Interest on judgments generally; interest on money judgment for rent; interest on money judgment for delinquent property taxes
   (a) Legal rate of interest on judgments. — Except as provided in § 11-106 of this subtitle, the legal rate of interest on a judgment shall be at the rate of 10 percent per annum on the amount of judgment.
(b) Rate of interest for judgments for rent of residential premises. — The legal rate of interest on a money judgment for rent of residential premises shall be at the rate of 6 percent per annum on the amount of the judgment.
(c) Rate of interest for judgments for delinquent real or personal property taxes. — The legal rate of interest on a money judgment for delinquent real or personal property taxes shall be the greater of:….”

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Md. COURTS AND JUDICIAL PROCEEDINGS Code Ann. § 11-106 reads in part:
 “§ 11-106. Interest on judgments arising from contracts for loan of money; student loans
   (a) Judgments arising from contracts for the loan of money; contractual rate of interest for student loans. — A money judgment entered in an action arising from a contract for the loan of money shall carry interest at the rate charged in the contract on any balance remaining unpaid until the date of maturity of the contract as originally scheduled. However, the rate of interest shall be on the unpaid principal of the money borrowed. The provisions of this section do not apply to any loan secured by a mortgage or deed of trust. The provisions of this section do not apply when the contractual rate of interest for a student loan of money is less than the prevailing legal rate of interest allowable on the judgment, as set forth in § 11-107 of this subtitle, unless the agreement for the loan of money expressly provides otherwise.”


Inside Maryland Interest Rate Laws