In Mississippi, the legal rate of interest is 8% per year, compounded annually
That sounds like it is illegal to charge a higher rate. But, that really is not the case.
What the phrase really means is that 8% is the rate the law allows if the parties did not agree to something different. So, for example, if your loan document does not state the rate of interest, the law presumes it is 8%. The same applies to obligations to repay money, even if there is nothing in writing.
So how do many lenders charge more than 8%?
Charging a rate higher than the law allows is called usury. Mississippi has laws that were originally intended to protect borrowers from usury. The sad fact is today these laws provide little protection to borrowers.
This is because the Mississippi Legislature created a broad exception to the usury laws. It is now legal for any borrower to agree in writing to any annual rate if the original loan exceeds $2000.
So, as the saying goes, read the fine print carefully. It is possible for a borrower to end up paying more interest than the amount of the loan.
Read here for interest rates on car and truck loans.
If you have a question about the interest you are being charged, or that you want to charge someone else, call us at 601-607-3156.