2012 New York Consolidated Laws
GOB - General Obligations
Article 5 - CREATION, DEFINITION AND ENFORCEMENT OF CONTRACTUAL OBLIGATIONS
Title 5 - (5-501 - 5-531) INTEREST AND USURY; BROKERAGE ON LOANS
5-501 - Rate of interest; usury forbidden.


NY Gen Oblig L § 5-501 (2012) What's This?
 
    § 5-501. Rate  of  interest; usury forbidden. 1. The rate of interest,
  as computed pursuant to this title, upon the loan or forbearance of  any
  money,  goods,  or  things in action, except as provided in subdivisions
  five and six of this section or as otherwise provided by law,  shall  be
  six  per  centum  per  annum  unless  a  different rate is prescribed in
  section fourteen-a of the banking law.
    2. No person or corporation shall,  directly  or  indirectly,  charge,
  take  or receive any money, goods or things in action as interest on the
  loan or forbearance of any money, goods or things in action  at  a  rate
  exceeding  the  rate  above  prescribed.  The  amount  charged, taken or
  received as interest shall include any and all amounts paid or  payable,
  directly  or  indirectly,  by  any  person, to or for the account of the
  lender in consideration for making the loan or forbearance as defined by
  the superintendent of financial services pursuant to  subdivision  three
  of section fourteen-a of the banking law except such fee as may be fixed
  by  the  commissioner  of  taxation and finance as the cost of servicing
  loans made by the property and liability insurance security fund.
    3. If the rate of interest charged, taken or received on any  loan  or
  forbearance secured primarily by either (i) an interest in real property
  improved  by a one to six family residence occupied by the owner or (ii)
  certificates of stock or other evidence of an ownership  interest  in  a
  corporation  or  partnership  formed  for the purpose of the cooperative
  ownership of real estate taken as security for a loan under  subdivision
  five  of  section  one  hundred  three  of  the banking law, subdivision
  eight-a of section two hundred thirty-five of such  law  or  subdivision
  two-a  of  section  three  hundred  eighty  of such law, exceeds six per
  centum per annum,
    a. in  the  case  of  a  loan  referred  to  by  clause  (i)  of  this
  subdivision,  the term of such loan or forbearance may extend five years
  beyond the maximum maturity of such loan otherwise  prescribed  by  law,
  and
    b.  notwithstanding  any other provision of law, the unpaid balance of
  the loan or forbearance may be prepaid, in whole  or  in  part,  at  any
  time.  If prepayment is made on or after one year from the date the loan
  or forbearance is made, no penalty may be imposed. If prepayment is made
  prior to such time, no penalty may be imposed unless provision  therefor
  is  expressly made in the loan contract, provided that no penalty may be
  imposed if prohibited by sections six-l and six-m of the banking law. In
  all cases, the right of prepayment shall be  stated  in  the  instrument
  evidencing   the  loan  or  forbearance,  provided,  however,  that  the
  provisions of this subdivision  shall  not  apply  to  the  extent  such
  provisions are inconsistent with any federal law or regulation.
    4. Except as otherwise provided by law, interest shall not be charged,
  taken  or  received  on any loan or forbearance at a rate exceeding such
  rate of interest as may be authorized by law at the  time  the  loan  or
  forbearance  is  made,  whether  or  not the loan or forbearance is made
  pursuant to a prior contract or commitment providing for a greater  rate
  of  interest,  provided, however, that no change in the rate of interest
  prescribed in section fourteen-a of the banking law shall affect (a) the
  validity of a loan or forbearance made before the date such rate becomes
  effective, or (b) the enforceability of  such  loan  or  forbearance  in
  accordance  with  its  terms,  except  that  if  any loan or forbearance
  provides for an increase in the rate of interest during the term of such
  loan or forbearance, the increased rate shall not exceed  such  rate  of
  interest  as  may  have  been authorized by law at the time such loan or
  forbearance was made.
    4-a. Notwithstanding  the  provisions  of  subdivision  four  of  this
  section,  a  loan  or  forbearance  repayable  on demand may provide for

  changes, reflecting variations in lending rates, from time  to  time  in
  the  rate of interest payable on such loan or forbearance up to the rate
  of interest authorized by law at the time of such  change  and  in  such
  case the rate of interest may be so changed in accordance with the terms
  of  the contract or loan commitment relating thereto; provided, however,
  that the rate of interest charged, taken or received on such a  loan  or
  forbearance  shall  not exceed the rate of interest authorized by law as
  it may subsequently be reduced from time to time; and further  provided,
  however, that in no event shall such a loan or forbearance by subject to
  an  authorized  rate  of  interest less than that applicable at the time
  such loan or forbearance was made. The provisions  of  this  subdivision
  shall  apply only to a loan or forbearance repayable on demand which has
  an initial principal of more than five thousand dollars  and  which  the
  borrower  has  the  right  to  repay  at  any  time in whole or in part,
  together with accrued interest on the principal so repaid,  without  any
  penalty.  With  respect  to  a  loan  or  forbearance  covered  by  this
  subdivision, the lender shall disclose to the borrower  in  writing  not
  less often than annually the amount of interest accrued or payable as of
  the  date  of  such  disclosure  and the manner by which such amount was
  computed.
    5. No law regulating  the  maximum  rate  of  interest  which  may  be
  charged,  taken  or  received  shall  apply  to  any loan or forbearance
  insured by the federal housing commissioner or for which a commitment to
  insure has been made by the federal housing commissioner or to any  loan
  or  forbearance  insured  or guaranteed pursuant to the provisions of an
  act of congress entitled "Servicemen's Readjustment Act of 1944."
    6. a. No law regulating the maximum rate  of  interest  which  may  be
  charged,  taken or received, except section 190.40 and section 190.42 of
  the penal law, shall apply to any loan or forbearance in the  amount  of
  two  hundred  fifty  thousand  dollars  or  more, other than a loan or a
  forbearance secured primarily by an interest in real  property  improved
  by  a  one or two family residence. A loan of two hundred fifty thousand
  dollars or more which is to be advanced in installments  pursuant  to  a
  written  agreement  by  a lender shall be deemed to be a single loan for
  the total amount which the lender has agreed to advance pursuant to such
  agreement on the terms and conditions provided therein.
    b. No law regulating  the  maximum  rate  of  interest  which  may  be
  charged,  taken or received, including section 190.40 and section 190.42
  of the penal law, shall apply to any loan or forbearance in  the  amount
  of  two  million  five  hundred  thousand  dollars  or  more.  Loans  or
  forbearances aggregating two million five hundred  thousand  dollars  or
  more which are to be made or advanced to any one borrower in one or more
  installments  pursuant  to  a  written  agreement by one or more lenders
  shall be deemed to be a single loan or forbearance for the total  amount
  which  the  lender or lenders have agreed to advance or make pursuant to
  such agreement on the terms and conditions provided therein.
    7. Except as otherwise expressly provided by  law,  in  the  event  of
  prepayment  in  full of a loan, any refund of unearned interest to which
  the borrower may be entitled may  not  be  computed  by  a  sum  of  the
  balances  or  similar  method  but  must  be  determined  according to a
  generally accepted actuarial method.

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