Chapter 438 of the Michigan Compiled Laws Service governs the interest rate laws in the state. Section 438.31 of this Chapter prescribes the legal rate of interest as five percent (5 %) per annum. Parties may agree upon in writing for the payment of any rate of interest, not exceeding seven percent (7 %) per annum.
According to Section 438.32, sellers or lenders who charge a higher rate of interest than allowed will not be permitted to recover any interest, any official fees, delinquency or collection charge, attorney fees or court costs. At the same time, the borrower or buyer will be entitled to recover attorney fees and court costs from the seller or lender.
Any unauthorized person who charges a rate of interest not exceeding twenty five percent (25 %) at simple interest per annum or the equivalent rate will be guilty of criminal usury. Section 438.41 provides the punishment for persons guilty of criminal usury as imprisonment for a term not exceeding five years or fined not more than $10,000.00, or both.
Pursuant to Section 600.6013, the rate of interest on money judgment is equal to one percent (1%) plus the average interest paid at auctions of five year U.S. treasury notes during the six months preceding July 1 and January 1. If the judgment is based on a contract action, the rate of interest on the judgment will be the same as specified in the written instrument and not exceeding thirteen percent (13 %).
MCLS § 438.31
Legal interest rate; scope; limitation; construction; foreign obligations.
Sec. 1. The interest of money shall be at the rate of $5.00 upon $100.00 for a year, and at the same rate for a greater or less sum, and for a longer or shorter time, except that in all cases it shall be lawful for the parties to stipulate in writing for the payment of any rate of interest, not exceeding 7% per annum. This act shall not apply to the rate of interest on any note, bond or other evidence of indebtedness issued by any corporation, association or person, the issue and rate of interest of which have been expressly authorized by the public service commission or the securities bureau of the department of commerce, or is regulated by any other law of this state, or of the United States, nor shall it apply to any time price differential which may be charged upon sales of goods or services on credit.
MCLS § 438.32
Violation of act; attorney fees and court costs, recovery.
Sec. 2. Any seller or lender or his assigns who enters into any contract or agreement which does not comply with the provisions of this act or charges interest in excess of that allowed by this act is barred from the recovery of any interest, any official fees, delinquency or collection charge, attorney fees or court costs and the borrower or buyer shall be entitled to recover his attorney fees and court costs from the seller, lender or assigns.
MCLS § 438.31d
Waiver of defense of usury by nonprofit corporation.
Sec. 1d. Notwithstanding the provisions of section 78 of Act No. 327 of the Public Acts of 1931, as amended, being section 450.78 of the Compiled Laws of 1948, a charitable, religious or other nonprofit corporation may waive the defense of usury without regard to the amount borrowed.
MCLS § 438.41
Criminal usury; definition; penalty.
Sec. 1. A person is guilty of criminal usury 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 25% at simple interest per annum or the equivalent rate for a longer or shorter period. Any person guilty of criminal usury may be imprisoned for a term not to exceed 5 years or fined not more than $10,000.00, or both.
MCLS § 600.6013
Interest on money judgment.
Sec. 6013. (1) Interest is allowed on a money judgment recovered in a civil action, as provided in this section. However, for complaints filed on or after October 1, 1986, interest is not allowed on future damages from the date of filing the complaint to the date of entry of the judgment. As used in this subsection, “future damages” means that term as defined in section 6301.
(7) For a complaint filed on or after July 1, 2002, if a judgment is rendered on a written instrument evidencing indebtedness with a specified interest rate, interest is calculated from the date of filing the complaint to the date of satisfaction of the judgment at the rate specified in the instrument if the rate was legal at the time the instrument was executed. If the rate in the written instrument is a variable rate, interest shall be fixed at the rate in effect under the instrument at the time the complaint is filed. The rate under this subsection shall not exceed 13% per year compounded annually.
(8) Except as otherwise provided in subsections (5) and (7) and subject to subsection (13), for complaints filed on or after January 1, 1987, interest on a money judgment recovered in a civil action is calculated at 6-month intervals from the date of filing the complaint at a rate of interest equal to 1% plus the average interest rate paid at auctions of 5-year United States treasury notes during the 6 months immediately preceding July 1 and January 1, as certified by the state treasurer, and compounded annually, according to this section. Interest under this subsection is calculated on the entire amount of the money judgment, including attorney fees and other costs. The amount of interest attributable to that part of the money judgment from which attorney fees are paid is retained by the plaintiff, and not paid to the plaintiff’s attorney.