This section sets rules for legal and conventional interest, caps conventional interest at 12% per year, requires it to be in writing, and limits when higher-interest amounts can be recovered.
§3500. Rates of legal and conventional interest; usury A. Interest is either legal or conventional. B. Legal interest is fixed at the following rates, to wit: (1) At the rate fixed in R.S. 13:4202 on all sums which are the object of a judicial demand, whence this is called judicial interest; and (2) On sums discounted at banks at the rate established by their charters. C.(1) The amount of the conventional interest cannot exceed twelve percent per annum. The same must be fixed in writing; testimonial proof of it is not admitted in any case. (2) Except in the cases herein provided, if any person shall pay on any contract a higher rate of interest than the above, as discount or otherwise, the same may be sued for and recovered within two years from the time of such payment. (3)(a) The owner or discounter of any note or bond or other written evidence of debt for the payment of money, payable to order or bearer or by assignment, shall have the right to claim and recover the full amount of such note, bond, or other written evidence of debt and all interest not beyond twelve percent per annum interest that may accrue thereon, notwithstanding that the rate of interest or discount at which the same may be or may have been discounted has been beyond the rate of twelve percent per annum interest or discount. (b) This provision shall not apply to the banking institutions of this state in operation under existing laws or to a consumer credit transaction as defined by the Louisiana Consumer Credit Law. (4)(a) The owner of any promissory note, bond, or other written evidence of debt for the payment of money to order or bearer or transferable by assignment shall have the right to collect the whole amount of such promissory note, bond, or other written evidence of debt for the payment of money, notwithstanding such promissory note, bond, or other written evidence of debt for the payment of money may include a greater rate of interest or discount than twelve percent per annum; such obligation shall not bear more than twelve percent per annum after maturity until paid. (b) This provision shall not apply to a consumer credit transaction as defined by the Louisiana Consumer Credit Law. (c) Where usury is a defense to a suit on a promissory note or other contract of similar character, it is permissible for the defendant to show the usury whether same was given by way of discount or otherwise, by any competent evidence. D. The provisions of this Article shall not apply to a loan made for commercial or business purposes or deferring payment of an obligation for commercial or business purposes. Amended by Acts 1908, No. 68; Acts 1970, No. 315, §1; Acts 1972, No. 454, §9; Acts 1980, No. 402, §2; Acts 1981, No. 574, §1; Acts 1981, No. 639, §1; Acts 1982, No. 142, §1; Acts 1984, No. 458, §1; Acts 1987, No. 883, §1; Acts 1989, No. 52, §1; Acts 1989, No. 774, §1, eff. July 9, 1989; Acts 1992, No. 1090, §1, eff. Oct. 1, 1992; Acts 1997, No. 275, §1, eff. June 17, 1997; Acts 1997, No. 1476, §2, eff. Sept. 6, 1998; Acts 2004, No. 743, §2, eff. Jan. 1, 2005. NOTE: See Acts 1997, No. 1476, §5(D)(2). The rate reduction day was the date on which the judgment in the lawsuit became final, May 8, 1998. Sections 2 through 4 became effective 120 days thereafter, Sept. 6, 1998.