{"id":371336,"date":"2016-03-31T21:34:18","date_gmt":"2016-04-01T02:34:18","guid":{"rendered":"https:\/\/content.findlaw-admin.com\/ability-law\/state\/alabama-law\/alabama-interest-rates-laws.html"},"modified":"2024-12-17T21:35:21","modified_gmt":"2024-12-18T02:35:21","slug":"alabama-interest-rates-laws","status":"publish","type":"page","link":"https:\/\/www.findlaw.com\/state\/alabama-law\/alabama-interest-rates-laws.html","title":{"rendered":"Alabama Interest Rates Laws"},"content":{"rendered":"\n
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Alabama Interest Rates Laws<\/h1>\n
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Created by FindLaw’s team<\/a> of legal writers and editors<\/i><\/p>\n\n | Last updated\n

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The last updated date refers to the last time this article was reviewed by FindLaw or one of our contributing authors<\/a>. We make every effort to keep our articles updated. For information regarding a specific legal issue affecting you, please contact an attorney in your area<\/a>.<\/em><\/p>\n\n <\/div>\n <\/details>\n<\/section>\n

Consumers are bombarded by advertisements claiming to lower their debt<\/a> by signing up for a new credit card or personal loan, only to find out months later that the promotional rate was far better than the actual rate. But just how much is too high to be a legal interest rate? This varies by state. Alabama\u2019s interest rate laws<\/a> are outlined in the table below.<\/p>\r\n\r\n
Code Sections<\/b><\/td>\r\nAlabama Code Title 8: Commercial Law and Consumer Protection, Chapter 8: Interest and Usury<\/a><\/td>\r\n<\/tr>
Legal Maximum Rate of Interest<\/b><\/td>\r\nThe legal maximum interest rate, if agreed upon in writing, is 8% per year, otherwise the maximum rate is 6% per year<\/a>.<\/td>\r\n<\/tr>
Penalty for Usury (Unlawful Interest Rate)<\/b><\/td>\r\nIf the interest charged exceeds the amount legally permitted by Alabama law, it\u2019s usurious. If so, the contract can\u2019t be enforced<\/a>, except to pay the principal originally loaned. The borrower can also deduct from the principal any interest already paid.
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\r\nHowever, usury as a defense to paying a debt can\u2019t be claimed on a \u201cholder in due course<\/a>\u201d (a person who purchased the debt and was assigned the right to receive the debt payments) of any negotiable instrument<\/a> (like a check or note).<\/td>\r\n<\/tr>
Interest Rates on Legal Judgments<\/b><\/td>\r\nThe interest rate for money judgments (other than costs) is typically 12%<\/a>. If the judgment was based on a contract, then it\u2019s at the rate of interest stated in the contract from the date of the cause of action, the breach of the contract<\/a>. Judgments based on other actions, including fees allowed to a trustee, estate administrator, or attorney shall bear interest at 12% from the date of the entry of the judgment.
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\r\nPast due child support is charged at 7.5% per year<\/a> since September 1, 2011.<\/td>\r\n<\/tr>
Exceptions<\/b><\/td>\r\nAlthough the general legal maximum interest rate is 6% annually, there are many exceptions. Most exemptions are for specific types of public or non-profit groups or for loans where federal law applies, including all of the following which are exempt from Alabama\u2019s usury laws:
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