Dictionary of Banking Terms: legal rate of interest
legal rate of interest
- maximum loan interest rate permitted by state law. An interest rate in excess of the legal rate is considered USURY; the penalties for charging excessive interest may include stiff fines or forfeiture of interest and/or principal.
- rate of interest set by state law for legally enforceable claims, such as legal judgments and overdue taxes. This rate is rarely the highest rate allowed by law for any debt.
