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Interest Rate Laws in the State of Texas

The state of Texas has consumer protection laws that limit the number of interest creditors can charge for certain types of loans. These legal limitations are intended to prevent the practice of usury, which is the charging of excessive interest and fees on loans made to consumers and businesses. Retaining the professional services of a Sugar Land small business attorney can often provide added protection against unfair loan terms and onerous provisions of these legal documents. Here are some key points to remember about interest rate laws in Texas.

Strict Limits on Some Interest Rates

Texas statutes limit interest rates to 6 percent for most consumer financial transactions and to 18 percent for court judgments. These limits can be waived through mutual agreement between a lender and a consumer, which can negate the statutory limits on interest rates in the state. This process usually involves a signed agreement or an online consent form that allows lenders and borrowers to make arrangements not covered by Texas finance statutes.

Not All Loans Are Covered

Certain types of loans are exempted from Texas interest rates laws. Business and commercial loans, for example, are usually governed by contracts that must be agreed to and signed by all parties. Credit card and other revolving and open-ended credit accounts are also exempt from limits on the interest charged. Funds used for investments and venture capital arrangements can earn significantly more than the limits on interest rates. Your Katy small business attorney can provide you with professional guidance on these contractual arrangements and on the right solutions for your funding needs.

Interest Rate Limits Enforced by Law

The Texas Office of Consumer Credit Commissioner is responsible for enforcing anti-usury laws in the state and assessing penalties for lenders who violate these regulations. Penalties for these offenses include enforced restitution of three times the amount of excess interest charged, $2,000 or 20 percent of the principal amount of the loan, reasonable attorney’s fees and misdemeanor fines of up to $1,000 per offense. This can quickly add up to significant penalties for lenders who violate the terms of Texas interest rate laws.

The Sugar Land real estate law attorneys at Henry A. Jakob can help you manage all your business litigation and loan contract needs. We will work with you to ensure that your financial arrangements are managed in the most cost-effective and practical way for your business and personal needs. Whether you need assistance navigating the commercial mortgage process or managing ongoing civil litigation, we have the experience you need to succeed in the competitive business world. Call us today at 832-879-2244 to set up a consultation with us. We look forward to serving you.


  • Luciana Rodriguez
    Posted September 9, 2018 3:20 am

    I am being charged an interest rate of 10.9 on a home loan purchased in February of 2007 is this legal? The original lender was landmark valley homes and they have now transferred the loan to Inter National Bank. Who are escrowing for taxes and now I am getting letters in the mail stating I owe over 14k in taxes. I need a consultation please

  • Rachelle Smith
    Posted May 30, 2019 8:16 pm

    What are your sources for this article?

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