2014 Connecticut General Statutes
Title 36a - The Banking Law of Connecticut
Chapter 668 - Nondepository Financial Institutions
Section 36a-573 - (Formerly Sec. 36-243). Charge of greater than legal interest. Enforcement.

(a) No person, except as authorized by the provisions of sections 36a-555 to 36a-573, inclusive, shall, directly or indirectly, charge, contract for or receive any interest, charge or consideration greater than twelve per cent per annum upon the loan, use or forbearance of money or credit of the amount or value of (1) five thousand dollars or less for any such transaction entered into before October 1, 1997, and (2) fifteen thousand dollars or less for any such transaction entered into on and after October 1, 1997. The provisions of this section shall apply to any person who, as security for any such loan, use or forbearance of money or credit, makes a pretended purchase of property from any person and permits the owner or pledgor to retain the possession thereof, or who, by any device or pretense of charging for the person’s services or otherwise, seeks to obtain a greater compensation than twelve per cent per annum. No loan for which a greater rate of interest or charge than is allowed by the provisions of sections 36a-555 to 36a-573, inclusive, has been contracted for or received, wherever made, shall be enforced in this state, and any person in any way participating therein in this state shall be subject to the provisions of said sections, provided, a loan lawfully made after June 5, 1986, in compliance with a validly enacted licensed loan law of another state to a borrower who was not, at the time of the making of such loan, a resident of Connecticut but who has become a resident of Connecticut, may be acquired by a licensee and its interest provision shall be enforced in accordance with its terms.

(b) The provisions of subsection (a) of this section shall apply to any loan made or renewed in this state if the loan is made to a borrower who resides in or maintains a domicile in this state and such borrower (1) negotiates or agrees to the terms of the loan in person, by mail, by telephone or via the Internet while physically present in this state; (2) enters into or executes a loan agreement with the lender in person, by mail, by telephone or via the Internet while physically present in this state; or (3) makes a payment of the loan in this state. As used in this subsection, “payment of the loan” includes a debit on an account the borrower holds in a branch of a financial institution or the use of a negotiable instrument drawn on an account at a financial institution, and “financial institution” means any bank or credit union chartered or licensed under the laws of this state, any other state or the United States and having its main office or a branch office in this state.

(c) Whenever it appears to the commissioner that any person has violated the provisions of subsection (a) of this section or offered a loan that violates the provisions of subsection (a) of this section, the commissioner may investigate, take administrative action or assess civil penalties and restitution in accordance with the provisions of sections 36a-50 and 36a-52.

(1949 Rev., S. 5952; 1949, S. 2765d; 1957, P.A. 439, S. 4; 1963, P.A. 175, S. 7; 1969, P.A. 242, S. 7; P.A. 77-129, S. 7; P.A. 86-216, S. 1, 3; P.A. 94-122, S. 268, 340; P.A. 97-13, S. 3; P.A. 09-208, S. 41; P.A. 11-216, S. 33.)

History: 1963 act included “charge” in provision re 12% interest and raised applicable loan limit from $600 to $1,000; 1969 act raised limit to $1,800 and deleted reference to loan, etc. of “goods or things in action”; P.A. 77-129 raised limit to $5,000 and added proviso re loans exceeding allowed interest rate or charge; P.A. 86-216 amended section to permit a licensed small loan company to enforce an interest provision against an out of state borrower who becomes a Connecticut resident, even if the interest rate exceeds the maximum rate permitted under Connecticut law; P.A. 94-122 made technical changes, effective January 1, 1995; Sec. 36-243 transferred to Sec. 36a-573 in 1995; P.A. 97-13 increased limit from $5,000 to $15,000 for loan transactions entered into on and after October 1, 1997; P.A. 09-208 designated existing provisions as Subsec. (a) and added Subsecs. (b) and (c) re applicability to loans made or renewed in this state and enforcement of provisions; P.A. 11-216 amended Subsec. (c) to make a technical change, effective July 13, 2011.

Annotations to former section 36-243:

Under former statute, note is void and unenforceable if maker owes licensee more than $300. 109 C. 116. Cited. 115 C. 106; 149 C. 159; 201 C. 89.