Louisiana Revised Statutes 9:3509 – Rate of interest paid for commercial, business, or agricultural loans; rate upon default
Terms Used In Louisiana Revised Statutes 9:3509
- Contract: A legal written agreement that becomes binding when signed.
- Corporation: A legal entity owned by the holders of shares of stock that have been issued, and that can own, receive, and transfer property, and carry on business in its own name.
- Fixed Rate: Having a "fixed" rate means that the APR doesn't change based on fluctuations of some external rate (such as the "Prime Rate"). In other words, a fixed rate is a rate that is not a variable rate. A fixed APR can change over time, in several circumstances:
- You are late making a payment or commit some other default, triggering an increase to a penalty rate
- The bank changes the terms of your account and you do not reject the change.
- The rate expires (if the rate was fixed for only a certain period of time).
- Guarantor: A party who agrees to be responsible for the payment of another party's debts should that party default. Source: OCC
- Interest rate: The amount paid by a borrower to a lender in exchange for the use of the lender's money for a certain period of time. Interest is paid on loans or on debt instruments, such as notes or bonds, either at regular intervals or as part of a lump sum payment when the issue matures. Source: OCC
- Mortgage: The written agreement pledging property to a creditor as collateral for a loan.
- Obligation: An order placed, contract awarded, service received, or similar transaction during a given period that will require payments during the same or a future period.
- Partnership: A voluntary contract between two or more persons to pool some or all of their assets into a business, with the agreement that there will be a proportional sharing of profits and losses.
- person: includes a body of persons, whether incorporated or not. See Louisiana Revised Statutes 1:10
- Usury: Charging an illegally high interest rate on a loan. Source: OCC
A. Notwithstanding any other provisions of the law of this state to the contrary, any debtor that is a domestic corporation, a limited liability company formed pursuant to the laws of this or any other state, a foreign corporation, a partnership in commendam formed pursuant to the laws of this state, a registered limited liability partnership formed pursuant to the laws of this or any other state, a foreign limited partnership, or a partnership in which all of the partners are either corporations, limited liability companies formed pursuant to the laws of this or any other state, foreign limited partnerships, partnerships in commendam, or partnerships comprised of corporations, foreign limited partnerships, or partnerships in commendam, or registered limited liability partnerships formed pursuant to the laws of this or any other state, or ordinary partnership or any other person or individual borrowing funds for commercial, business, or agricultural purposes or deferring payment of an obligation for commercial, business, or agricultural purposes, may agree to pay interest in excess of the maximum rate of conventional interest authorized by the laws of this state, whether in connection with unsecured or secured indebtedness and whether the secured indebtedness is secured, in whole or in part, directly or indirectly, by a real estate mortgage or chattel mortgage on property in this state or is otherwise secured, and as to any such agreement such debtor shall be prohibited from asserting a claim or defense of usury or of the taking of interest in excess of the maximum rate of conventional interest, and any person whatsoever signing as co-maker, guarantor, or endorser for such debtor shall also be prohibited from asserting any such claim or defense. The term “foreign limited partnership”, as used hereinabove, shall mean any partnership domiciled in any state of the United States, other than Louisiana or the District of Columbia, which shall have been formed and is existing pursuant to the limited partnership law or Uniform Limited Partnership Law of any such state, and such partnership need not qualify as a partnership in commendam under the laws of this state.
B.(1) Notwithstanding the provisions of Subsection A of this Section, and unless otherwise agreed in writing after the default, a lender may not prospectively increase the simple interest rate under a commercial, business, or agricultural purpose loan following declaration of the obligor’s default except as follows:
(a) With respect to obligations having an original principal balance of two hundred fifty thousand dollars or less, the fixed simple interest rate shall not be prospectively increased to a rate greater than eighteen percent per annum or three percentage points over the original, fixed contract rate in effect prior to default, whichever is greater.
(b) With respect to obligations having an original principal balance in excess of two hundred fifty thousand dollars, the fixed simple interest rate shall not be prospectively increased to a rate greater than twenty-one percent per annum or three percentage points over the original, fixed contract rate in effect prior to default, whichever is greater.
(2) This Subsection shall apply only to fixed rate, simple interest commercial, business, and agricultural purpose loans, promissory notes, and other obligations entered into on or after September 7, 1990, which provide for a prospective increase in the interest rate following the obligee’s declaration of an obligor’s default. This Subsection shall not apply to consumer credit transactions or other consumer obligations, or to loans, notes, or other obligations that do not bear interest at a fixed rate and on a simple interest basis prior to a declaration of default. This Subsection shall also not apply to commercial, business, or agricultural purpose loans, notes, or other obligations which are contractually subject to the laws of another state notwithstanding the fact that the obligor may be located or have facilities in Louisiana or that loan proceeds or a portion thereof may be utilized in Louisiana.
(3) The exclusive remedy that may be asserted against a lender or other obligee for a violation of this Subsection is the return of any excessive post-default interest that may have been assessed and collected. Specifically, the obligor shall have no rights under La. Rev. Stat. 9:3501.
Acts 1990, No. 734, §1; Acts 1990, No. 847, §1; Acts 1991, No. 697, §1; Acts 1995, No. 782, §1; Acts 1997, No. 1295, §1.