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Regulation on Interest Rate Limit w/Deposit Acct

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Is there a limit (by regulation) on an interest rate that can be charged on a consumer loan that is fully secured with cash on deposit at the Bank? We have a $5,000 loan that is going to be secured by a $5,000 savings account held at the Bank. One of our Board Members thought there was a regulation stating the maximum that can be charged on this type of loan is 2% over the interest rate being earned on the deposit account.

Any restriction that might remain would be a function of state law. (There are some, so please look there.) The federal restriction was removed several years ago.

I would expect the issue to be specifically addressed in your loan policy.

First published on 5/27/13

First published on 05/27/2013

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