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Washington Interest Rate Laws

Chapter 19.52 of the Revised Code of Washington governs the interest rate laws in the state of Washington.  The rate of interest on every loan or forbearance of money, goods, or thing in action will be at the rate of twelve percent (12 %) per annum where there is no different rate agreed upon in writing between the parties.  This rate is prescribed in Section 19.52.010.

A rate of interest is legal and permissible if it does not exceed the higher of either twelve percent (12 %) per annum or four percentage points above the equivalent coupon issue yield of the average bill rate for twenty-six week treasury bills, as published by the Board of Governors of the Federal Reserve System.

A person charging or receiving usurious interest will only be entitled to the principal, less the amount of interest accruing at the usurious rate.  If the interest has already been paid, the creditor will only be entitled to the principal less twice the amount of the interest paid, and less the amount of all accrued and unpaid interest.  The debtor is entitled to costs and reasonable attorney fees plus the amount by which the amount the debtor has paid under the contract exceeds the amount to which the creditor is entitled.  Section 19.52.030 provides for these penalties.

Some of the exceptions to the state usury laws are as follows:

  1. Pursuant to Section 19.52.100, retail installment transactions or contracts;
  2. Pursuant to Section 19.52.110, interest charged by any registered broker-dealer;
  3. Pursuant to Section 19.52.120, sales contract providing for deferred payment of purchase price;
  4. Pursuant to Section19.52.130, charge made by assignee of retail installment contract or charge agreement to seller-assignor;
  5. Pursuant to Section 19.52.140, interest, penalties, or costs imposed on delinquent property taxes;
  6. Pursuant to Section 19.52.160, the financing of mobile homes which comes under the definition of real property.  Such financing should be insured by a federal instrumentality;
  7. Pursuant to Section 19.52.170, certain loans from a tax-qualified retirement plan;
  8. Pursuant to Section19.52.150, defense or action of usury not applicable to consumer leases.

Rev. Code Wash. (ARCW) § 19.52.010

Rate in absence of agreement — Application to consumer leases
(1) Every loan or forbearance of money, goods, or thing in action shall bear interest at the rate of twelve percent per annum where no different rate is agreed to in writing between the parties: PROVIDED, That with regard to any transaction heretofore or hereafter entered into subject to this section, if an agreement in writing between the parties evidencing such transaction provides for the payment of money at the end of an agreed period of time or in installments over an agreed period of time, then such agreement shall constitute a writing for purposes of this section and satisfy the requirements thereof. The discounting of commercial paper, where the borrower makes himself liable as maker, guarantor, or indorser, shall be considered as a loan for the purposes of this chapter.
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Rev. Code Wash. (ARCW) § 19.52.020

Highest rate permissible — Setup charges
(1) Any rate of interest shall be legal so long as the rate of interest does not exceed the higher of: (a) Twelve percent per annum; or (b) four percentage points above the equivalent coupon issue yield (as published by the Board of Governors of the Federal Reserve System) of the average bill rate for twenty-six week treasury bills as determined at the first bill market auction conducted during the calendar month immediately preceding the later of (i) the establishment of the interest rate by written agreement of the parties to the contract, or (ii) any adjustment in the interest rate in the case of a written agreement permitting an adjustment in the interest rate. No person shall directly or indirectly take or receive in money, goods, or things in action, or in any other way, any greater interest for the loan or forbearance of any money, goods, or things in action.
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Rev. Code Wash. (ARCW) § 19.52.030

Usury — Penalty upon suit on contract — Costs and attorneys’ fees
(1) If a greater rate of interest than is allowed by statute shall be contracted for or received or reserved, the contract shall be usurious, but shall not, therefore, be void. If in any action on such contract proof be made that greater rate of interest has been directly or indirectly contracted for or taken or reserved, the creditor shall only be entitled to the principal, less the amount of interest accruing thereon at the rate contracted for; and if interest shall have been paid, the creditor shall only be entitled to the principal less twice the amount of the interest paid, and less the amount of all accrued and unpaid interest; and the debtor shall be entitled to costs and reasonable attorneys’ fees plus the amount by which the amount the debtor has paid under the contract exceeds the amount to which the creditor is entitled: PROVIDED, That the debtor may not commence an action on the contract to apply the provisions of this section if a loan or forbearance is made to a corporation engaged in a trade or business for the purposes of carrying on said trade or business unless there is also, in connection with such loan or forbearance, the creation of liability on the part of a natural person or that person’s property for an amount in excess of the principal plus interest allowed pursuant to RCW 19.52.020. The reduction in principal shall be applied to diminish pro rata each future installment of principal payable under the terms of the contract.
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Rev. Code Wash. (ARCW) § 19.52.100

Chapter not applicable to retail installment transactions
This chapter shall not apply to a retail installment transaction, as defined by RCW 63.14.010, whether or not it is construed to be a loan or forbearance of any money, goods, or things in action.

Rev. Code Wash. (ARCW) § 19.52.110

Limitations in chapter not applicable to interest charged by broker-dealers — When
The interest charged by any broker-dealer registered under chapter 21.20 RCW and under the federal securities and exchange act of 1934, as amended, shall not be subject to the limitations imposed by this chapter if the underlying loans (1) may be paid in full at the option of the borrower and (2) are subject to the credit regulations of the board of governors of the federal reserve system, or its successor.

Rev. Code Wash. (ARCW) § 19.52.120

Sales contract providing for deferred payment of purchase price not subject to chapter
A sales contract for goods or services providing for the deferred payment of the purchase price shall not be subject to this chapter, regardless of who seeks to enforce the contract, notwithstanding the existence or occurrence of any one or more of the following events:

Rev. Code Wash. (ARCW) § 19.52.130

Charge made by assignee of retail installment contract or charge agreement to seller-assignor not limited by chapter — No agreement between credit card issuing bank and retailer shall prohibit discounts for cash payment
(1) Nothing contained in this chapter shall be deemed to limit any charge made by an assignee of a retail installment contract or charge agreement to the seller-assignor upon the sale, transfer, assignment, or discount of the contract or agreement, notwithstanding retention by the assignee of recourse rights and notwithstanding duties retained by the assignee to service delinquencies, perform service or warranty agreements regarding the property which is the subject matter of the assigned or discounted contracts or charge agreements, or to do or perform any other duty with respect to the account or contract assigned or the subject matter of such account or contract.
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Rev. Code Wash. (ARCW) § 19.52.140

Chapter not applicable to interest, penalties, or costs on delinquent property taxes
This chapter does not apply in respect to interest, penalties, or costs imposed on delinquent property taxes under chapter 84.64 RCW.

Rev. Code Wash. (ARCW) § 19.52.150

Defense or action of usury not applicable to consumer leases

Rev. Code Wash. (ARCW) § 19.52.160

Chapter not applicable to mobile homes
This chapter shall not apply to the financing of mobile homes which meets the definition of real property contained in RCW 84.04.090, and which financing is insured by a federal instrumentality.

Rev. Code Wash. (ARCW) § 19.52.170

Chapter not applicable to certain loans from tax-qualified retirement plan
This chapter does not apply to any loan permitted under applicable federal law and regulations from a tax-qualified retirement plan to a person then a participant or a beneficiary under the plan.
This section affects loans being made, negotiated, renegotiated, extended, renewed, or revised on or after April 20, 1989.

Rev. Code Wash. (ARCW) § 4.56.110

Interest on judgments
Interest on judgments shall accrue as follows:
(1) Judgments founded on written contracts, providing for the payment of interest until paid at a specified rate, shall bear interest at the rate specified in the contracts: PROVIDED, That said interest rate is set forth in the judgment.
(2) All judgments for unpaid child support that have accrued under a superior court order or an order entered under the administrative procedure act shall bear interest at the rate of twelve percent.
(3) Judgments founded on the tortious conduct of individuals or other entities, whether acting in their personal or representative capacities, shall bear interest from the date of entry at two percentage points above the equivalent coupon issue yield, as published by the board of governors of the federal reserve system, of the average bill rate for twenty-six week treasury bills as determined at the first bill market auction conducted during the calendar month immediately preceding the date of entry. In any case where a court is directed on review to enter judgment on a verdict or in any case where a judgment entered on a verdict is wholly or partly affirmed on review, interest on the judgment or on that portion of the judgment affirmed shall date back to and shall accrue from the date the verdict was rendered.
(4) Except as provided under subsections (1), (2), and (3) of this section, judgments shall bear interest from the date of entry at the maximum rate permitted under RCW 19.52.020 on the date of entry thereof. In any case where a court is directed on review to enter judgment on a verdict or in any case where a judgment entered on a verdict is wholly or partly affirmed on review, interest on the judgment or on that portion of the judgment affirmed shall date back to and shall accrue from the date the verdict was rendered. The method for determining an interest rate prescribed by this subsection is also the method for determining the “rate applicable to civil judgments” for purposes of RCW 10.82.090.


Inside Washington Interest Rate Laws