2021 Maryland Statutes
Commercial Law
Title 12 - Credit Regulations
Subtitle 3 - Consumer Loans -- Credit Provisions
Section 12-314 - Loans at Greater Than Authorized Rate of Interest

    (a)    A person may not lend $25,000 or less if:

        (1)    The person directly or indirectly contracts for, charges, or receives a greater rate of interest, charge, discount, or other consideration than that authorized by the laws of this State;

        (2)    The transaction violates the federal Military Lending Act; or

        (3)    The person is not licensed under or exempt from the licensing requirements under the Maryland Consumer Loan Law – Licensing Provisions.

    (b)    (1)    (i)    A loan made in the amount of $25,000 or less, regardless of whether the loan is or purports to be made under this subtitle, is void and unenforceable if:

                1.    Except as provided in subparagraph (ii) of this paragraph, a person contracts for a loan that has a rate of interest, charge, discount, or other consideration greater than that authorized under State law;

                2.    The loan violates the federal Military Lending Act; or

                3.    A person who is not licensed under or exempt from the licensing requirements under Title 11, Subtitle 2 of the Financial Institutions Article made the loan.

            (ii)    A loan is not void and unenforceable if:

                1.    A clerical error or mistake resulted in the rate of interest, charge, discount, or other consideration being greater than the amount authorized under State law; and

                2.    A person corrects the error or mistake before the first payment is due under the loan.

        (2)    A person may not receive or retain any principal, interest, fees, or other compensation with respect to any loan that is void and unenforceable under this subsection.

        (3)    This subsection does not apply to a person who is exempt from licensing under this subtitle.

    (c)    (1)    This section does not apply to a loan transaction validly made in another state in compliance with a similar loan law of that state.

        (2)    A lender may not collect an amount that is more than the total amount that would be permitted if this subtitle were applicable.

        (3)    This section applies to all loans made by a lender domiciled in another state to a borrower who is a resident of this State if the application for the loan originated in this State.

    (d)    With respect to a loan that is void and unenforceable under this section, a person may not:

        (1)    Collect or attempt to collect, directly or indirectly, any amount from the borrower;

        (2)    Enforce or attempt to enforce the contract against any property securing the loan; or

        (3)    Sell, assign, or otherwise transfer the loan to another person.