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Interest Rates

Consumers should be aware that maximum interest rates allowed under the law may be significantly higher than what is actually being charged in the market. The interest rate which a lender charges you may be influenced also by factors specific to your loan such as your credit history, the amount and type of collateral and terms of the loan, such as the length of time a purchase is financed and whether payments will be made on an installment basis or one lump sum due at the end of a certain time period (a "balloon"). Because of possible variation from lender to lender, it is important that consumers "shop around" and check the various rates charged by banks, credit unions, finance companies and other lenders in order to negotiate the best rate for the type of loan desired.

Applicable Georgia Laws:

Access to the Georgia Code is provided by LexisNexis from the Georgia General Assembly's website. To find one of the Code Sections noted below, go to the Official Code of Georgia (OCGA) and enter the Code Section you want to search for:

  • 7-4-1 et seq. General Interest and Usury
  • 7-5-1 et seq. Credit Card Charges and Fees
  • 7-3-1 et seq. Industrial Loans
  • 10-1-1 et seq. Retail Installment and Home Solicitation Sales and Motor Vehicle Sales Financing

Loans.  The interest rate and fees which can be charged are established by the written contract (note) which is signed by the customer. If the rate of interest is not established by written contract, the legal rate of interest shall be 7 percent per annum simple interest. Generally, when the principal amount of the loan is $3,000 or less the rate a bank may charge shall not exceed 16 percent per annum simple interest. However, loans made under the Georgia Industrial Loan Act [GILA] may have rates, fees and charges as specified within that particular statute. The interest rate charged for loan amounts more than $3,000 is negotiated between the lender and the borrower and stated in the written contract. However, in most cases, the maximum rate of interest, including fees, which can be charged is 5% per month, which translates to a 60% annual percentage rate. This is called the criminal usury rate ceiling. Certain fees for services may be excluded from the definition of interest for State law purposes.

Credit Cards.  In most cases, in the State of Georgia, the rate of interest and fees which may be charged on a credit card is governed by the account agreement in effect. In many instances, institutions issuing credit cards will allow a low interest rate when a consumer first receives the card but will increase the rate after a certain period of time. In addition, the account agreement may allow the institution to increase the interest rate if a certain number of payments are received late. All of this means that it is very important to "read the fine print" in order to see exactly what will be charged and under what circumstances. It is also important to read any supplemental notices provided by a credit card company regarding any changes in the terms of the account agreement.

Retail Installment Contracts.  The agreement where the seller finances a purchase by means of an installment loan is called a retail installment contract.  The maximum rate of interest that can be charged is 13% per year. Such a contract should be in writing and is required by law to contain certain language. (Code Section 10-1-3). If a seller comes to one's home and makes a loan, the purchaser has a right to cancel such a home solicitation sale by 12:00 midnight of the third business day after the day on which the buyer signs the agreement. (Code Section 10-1-6).

Motor Vehicles.  If the amount financed exceeds $5,000, the rate may be negotiated between the buyer and seller.  Code Section 10-1-33(d).   However, if the amount financed is $5,000 or less, the rates listed in the table below apply. Please be aware these rates do not include fees and insurance and may differ from the annual percentage rate (APR) because of the term of the note:

Class 1 (New)

$10/$100/Yr. (10%)

Class 2 (1-2 Yr.)

$13/$100/Yr. (13%)

Class 3 (2-4 Yr.)

$15/$100/Yr. (15%)

Class 4 (4+ Yrs.)

$17/$100/Yr. (17%)

Late Fee (10 days)

May not exceed 5% per month or $50, whichever is less