Posted by Irwin on May 17, 2000 at 22:12:54:
This is a complex question. The answer is in the Arkansas State Court and Federal Court cases that interpret the constitutional provision that you refer to. Anything else would be pure guesswork, and it would be very risky to rely on it.
That said, the law probably governs ONLY loans that have no Federal connection, like FHA insurance or VA Guarantee, or made by a Federally chartered bank, S&L etc. As between you, and the guy you’re selling to, it probably applies, and limits your interest rate. But, as I said, have this check out by an Ark. lawyer.
Legal Issue - Posted by Finley
Posted by Finley on May 17, 2000 at 21:30:13:
I live in an Arkansas. My state has an archaic law, in the constitution that limits the interest charged on contracts to 5% above the Federal Discount Rate (currently 6.5%).
The article also states “The provisions hereof are not intended and shall not be deemed to supersede or otherwise invalidate any provisions of federal law applicable to loans or interest rates including loans secured by residential real property.”
Does this imply that there is federal law governing loans/interest?
If so what is the largest maximum interest rate allowed?
Re: Legal Issue - Posted by JHyre in Ohio
Posted by JHyre in Ohio on May 18, 2000 at 08:40:52:
While unfamiliar with Arkansas law, I’d be VERY surprised if there weren’t a way around that limitation. Reminds me of the Koranic injunction agianst accepting interest…yet Muslims collect “non-interest fees” all the time on “non-loan” investments from oil companies. The Devil is in the deatails- and in this case, the definition!
John Hyre