To protect borrowers, many states have made usury (charging excessively high interest rates) a crime. In New Jersey, it is considered criminal usury if a lender charges an interest rate of 30% or more to an individual, or 50% or more on an entity (a corporation, limited liability corporation, etc.). In addition to paying a fine, the lender may only recover the loan principal, and forfeits the right to interest on the loan.
Although most states have statutory limits on how much interest a creditor may charge, consumers regularly agree to higher rates when they agree to the terms of a credit offering (often found in the "small print"). For example, New Jersey interest rate laws sets the legal maximum at 6 percent (or 16 percent for contracts), but has multiple exceptions to the limit -- such as for a loan of more than $50,000; banks; and some other lending organizations. Because there are so many exceptions to the interest rate laws, and also many state usury laws are preempted (rendered inapplicable) by federal laws, it is very important that you protect yourself by reading the “small print†and understanding completely the terms of your credit card contract or loan.
Learn more about New Jersey interest rate laws in the following table.
| Legal Maximum Rate of Interest | 6% or up to 16% for contract (§31:1-1); loans in excess of 30% or 50% in limited liability to corporations are not permitted (§2C:21-19) |
| Penalty for Usury (Unlawful Interest Rate) | Only amount lent may be recovered (§31:1-3); guilty of criminal usury and up to $250,000 fine (§2C:21-19) |
| Interest Rates on Judgments | - |
| Exceptions | Loan for over $50,000; savings and loans; banks; Department of Housing and Urban Affairs and other organizations authorized by the Emergency Home Finance Act of 1970; state or federal government or quasi-governmental organizations (§31:1-1) |
Note: State laws are constantly changing -- contact a New Jersey consumer protection attorney or conduct your own legal research to verify the state law(s) you are researching.
More Information
For more information on this topic, in general, feel free to check out FindLaw’s article, Usury Laws and Limits on Credit Card Interest Rates. You can also click on the links provided below to take a look at additional resources relating to New Jersey's interest rate laws. Finally, if you find you are in need of more specific assistance or advice, you may want to retain a local consumer protection attorney.
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New Jersey Interest Rate Laws: Related Resources
