Usury and Loan Interest Rates in Missouri
Usury is the common practice of assessing interest on loans (e.g., you loan me money and I pay you back in installments, but with an interest rate of 2% being assessed against the principal amount of the loan). In Missouri, there are statutory guidelines which regulate what amounts of interest can and cannot be assessed. Absent agreement, the standard interest rate a creditor is allowed to receive interest is 9% per annum (which is also the typical rate for a judgment creditor). RSMo 408.020. Contracting parties, however, may agree upon an interest rate of 10%, or higher if the market rate for the loan happens to be higher (but never more than the market rate).
There are several notable exceptions to these usury guidelines. RSMo 408.035 provides that–
Notwithstanding the provisions of any other law to the contrary, it is lawful for the parties to agree in writing to any rate of interest, fees, and other terms and conditions in connection with any: (1) Loan to a corporation, general partnership, limited partnership or limited liability company; (2) Business loan of five thousand dollars or more; (3) Real estate loan, other than residential real estate loans and loans of less than five thousand dollars secured by real estate used for an agricultural activity; or (4) Loan of five thousand dollars or more secured solely by certificates of stock, bonds, bills of exchange, certificates of deposit, warehouse receipts, or bills of lading pledged as collateral for the repayment of such loans.
If an interest rate is above the statutory guidelines, and does not fit within one of these exceptions, then there is potentially a lawsuit. Any creditor who levies interest above the usury rate is liable for the costs that are in excess of the legal interest rate, plus court expenses and reasonable attorney fees. Moreover, a usurious interest rate can sometimes void all or part of a contract. For instance, a security agreement (i.e., a loan agreement between a creditor and debtor that is “secured” with collateral by the debtor) for personal property which bears a usurious interest rate is invalid under RSMo 408.070.