The rate of interest in the state of Vermont is dealt with in Title Nine (Trade and Commerce), Chapter 4 (Interest) under the provisions of Subchapter One. Section 41a prescribes the legal rate of interest at twelve percent (12 %) per annum.
Any person charging or receiving a higher rate than the legal rate will be fined not more than $ 500.00 or imprisoned for not more than six months, or both. Upon conviction after a first conviction, the offender will be fined not more than $ 1,000.00 or imprisoned for not more than one year, or both. Persons who knowingly charge excessive rates of interest will forfeit the entire interest. This penalty is provided in Section 50 of this Chapter. Any person paying such usurious interest can recover the amount so paid above the legal interest and also all expenses of collection, including a reasonable attorney fee. Rate of interest on a judgment is twelve percent (12 %) per annum.
Some of the transactions which are exempt from the state legal limit of twelve percent (12 %) per annum are:
- Single payment loans by lenders regulated by Title 8 and federal savings and loan associations;
- Bank credit card accounts or revolving line of credit;
- Loan or extension of credit secured by motor vehicles, mobile homes, travel trailers, aircraft, watercraft and farm equipment;
- Municipal bonds under Section 1761 of Title 24, Chapter 53.
9 V.S.A. § 41a
(a) Except as specifically provided by law, the rate of interest or the sum allowed for forbearance or use of money shall be twelve percent per annum computed by the actuarial method.
(b) The rate of interest or the sum allowed:
(1) For single payment loans by lenders regulated by Title 8 and federal savings and loan associations, the finance charge shall not exceed 18 percent per annum.
(2) For a retail installment contract the finance charge shall not exceed 18 percent per annum of the first $ 500.00 of the balance subject to finance charges and 15 percent per annum of the balance subject to finance charges in excess of $ 500.00.
(3) For a bank credit card account or revolving line of credit the rate shall be the rate agreed upon by the lender and the borrower. However, except for cash advances, no finance charge may be imposed for any monthly billing period in which there is no previous balance, or during which the sum of the payments received and other credits issued are equal to or exceed the amount of the previous balance.
(4) For a loan or extension of credit secured by motor vehicles, mobile homes, travel trailers, aircraft, watercraft and farm equipment, of the current and previous model year, the interest rate shall not exceed 18 percent per annum. For a loan or extension of credit secured by such collateral older than the current or previous model year, the interest rate shall not exceed 20 percent per annum.
(5) For an installment loan not otherwise limited by the preceding subdivisions of this subsection, the interest rate shall not exceed 24 percent per annum on the first $ 1000.00 of the aggregate balance outstanding; and shall not exceed 12 percent per annum of the aggregate balance outstanding in excess of $ 1000.00; or 18 percent annual percentage rate on the aggregate balance outstanding whichever is higher.
(6) A lender may charge interest rates on loans secured by deposits in excess of the rates otherwise allowed in this section only to the extent that such higher rate is required to comply with Federal Deposit Insurance Corporation, Federal Home Loan Bank and Federal Reserve Board regulations.
(7) For a loan or extension of credit secured by a subordinate lien against real estate, the interest rate shall not exceed 18 percent per annum. All such lien documents shall include a power of sale pursuant to 12 V.S.A. § 4531a et seq.
(8) For a loan or extension of credit secured by a first lien against real estate, the interest rate may be the same as may be charged by any financial institution or seller of residential real estate under the provisions of the federal Depository Institutions Deregulation and Monetary Control Act of 1980, as amended.
(9) For a retail charge agreement the finance charge shall be the rate or rates agreed upon by the parties to such charge agreement but not to exceed 21 percent per annum. However, no finance charge may be imposed for any monthly billing period in which there is no previous balance, or during which the sum of the payments received and other credits issued are equal to or exceed the amount of the previous balance. The term “billing period” shall mean the time interval between periodic statement dates. A billing period shall be considered a month or monthly if the last day of each billing period is on the same day of each month or does not vary by more than four days therefrom. For a retail charge agreement, the periodic billing can be no less than 1/48th of the balance as of the last advance.
9 V.S.A. § 2405
(k) The interest rates for retail installment sales shall be that authorized by subdivision 41a(b)(2) of this title, and the method of interest calculation shall be as specified in subsection 41a(d) of this title.
9 V.S.A. § 50
(a) When a greater rate of interest than is allowed by law is paid, the person paying it may recover the amount so paid above the legal interest, with interest thereon from the time of payment and all expenses of collection, including a reasonable attorney’s fee, in a civil action on this statute.
(b) Except as otherwise expressly authorized by law, a lender shall not knowingly or willfully make any contract, express or implied, which directly or indirectly calls for the payment of any interest or finance charge in excess of the legal rate as set forth in section 41a of this title. The section shall be enforceable only to the extent herein provided and the lender shall have no right to collect any interest or charges whatsoever and shall have a right to collect only one-half of the principal.
(c) Any person, partnership, association or corporation and the several members, officers, directors, agents and employees thereof, who knowingly or willfully contracts for or collects any sum in excess of legal interest for the loan, use or forbearance of money, unless expressly authorized by law so to do, shall, for the first offense, be fined not more than $ 500.00 or imprisoned for not more than six months, or both. Upon conviction for violating this section in any transaction entered into or consummated after a first conviction hereunder, the offender shall be fined not more than $ 1,000.00 or imprisoned for not more than one year, or both.
12 V.S.A. § 2903
Duration and effectiveness
(a) A judgment lien shall be effective for eight years from the issuance of a final judgment on which it is based except that a petition for foreclosure filed during the eight-year period shall extend the period until the termination of the foreclosure suit.
(b) Interest on a judgment lien shall accrue at the rate of 12 percent per annum.
24 V.S.A. § 1761
If any municipal corporation has authorized bonds to bear interest at a rate of interest not in excess of six percent prior to March 5, 1970, and any of such bonds remain unsold on that date, the legislative branch of the municipal corporation may approve an increase in the rate of interest of such authorized but unsold bonds and the increase in such rate of interest is hereby declared to be legal and valid, and such municipal corporation may issue such bonds which shall bear interest at the rate of interest approved by the legislative branch which increased rate of interest is declared to be legal and valid.