Virginia Code 6.2-303: Contracts for more than legal rate of interest.
A. Except as otherwise permitted by law, no contract shall be made for the payment of interest on a loan at a rate that exceeds 12 percent per year.
Terms Used In Virginia Code 6.2-303
- Contract: A legal written agreement that becomes binding when signed.
- Entity: means any corporation, partnership, association, cooperative, limited liability company, trust, joint venture, government, political subdivision, or other legal or commercial entity. See Virginia Code 6.2-100
- Forbearance: A means of handling a delinquent loan. A
- 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
- Loan: means a loan or forbearance of money. See Virginia Code 6.2-300
- Person: means any individual, corporation, partnership, association, cooperative, limited liability company, trust, joint venture, government, political subdivision, or other legal or commercial entity. See Virginia Code 6.2-100
- Probate: Proving a will
- Usury: Charging an illegally high interest rate on a loan. Source: OCC
B. Laws that permit payment of interest at a rate that exceeds 12 percent per year are set out, without limitation, in:
1. Article 4 (§ 6.2-309 et seq.) of this chapter;
2. Chapter 15 of Title 38.2, relating to interest chargeable by premium finance companies;
8. Section 54.1-4008, relating to interest chargeable by pawnbrokers; and
9. Section 58.1-3018, relating to interest and origination fees payable under third-party tax payment agreements.
C. In the case of any loan upon which a person is not permitted to plead usury, interest and other charges may be imposed and collected as agreed by the parties.
D. Any provision of this chapter that provides that a loan or extension of credit may be enforced as agreed in the contract of indebtedness, shall not be construed to preclude the charging or collecting of other loan fees and charges permitted by law, in addition to the stated interest rate. Such other loan fees and charges need not be included in the rate of interest stated in the contract of indebtedness.
E. The provisions of subsection A shall apply to any person who seeks to evade its application by any device, subterfuge, or pretense whatsoever, including:
1. The loan, forbearance, use, or sale of (i) credit, as guarantor, surety, endorser, comaker, or otherwise; (ii) money; (iii) goods; or (iv) things in action;
2. The use of collateral or related sales or purchases of goods or services, or agreements to sell or purchase, whether real or pretended; receiving or charging compensation for goods or services, whether or not sold, delivered, or provided; and
3. The real or pretended negotiation, arrangement, or procurement of a loan through any use or activity of a third person, whether real or fictitious.
F. Any contract made in violation of this section is void and no person shall have the right to collect, receive, or retain any principal, interest, fees, or other charges in connection with the contract.
G. Any contract entered into on or after July 1, 2024, pursuant to which a person receives a cash advance for assigning to a company or other entity a portion of such person’s rights to receive inheritance funds from a will that has been, or is anticipated to be, offered for probate in a circuit court of the Commonwealth shall be considered a loan. Any funds such person is obligated to pay under the terms of such contract in addition to the total of the cash advance shall be considered interest. Such contract shall be subject to the provisions of subsection A.
1987, c. 622, § 6.1-330.55; 1997, c. 180; 2002, c. 897; 2010, cc. 477, 794; 2020, cc. 1215, 1258; 2024, c. 728.