Houston, TX asked in Consumer Law for New York

Q: What is the maximum interest rate on a retail installment contract

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1 Lawyer Answer
Matthew Parham
Matthew Parham
  • Consumer Law Lawyer
  • Buffalo, NY
  • Licensed in New York

A: Assuming this relates to a contract executed in New York, the short answer is that there is none. Under the "time price doctrine" a retail installment sale has for hundreds of years been deemed not to be a loan of money subject to the usury laws. New York's Retail Installment Sales Act was amended in 1994 to make explicit that the maximum interest rate that may be charged is whatever rate is written in the contract.

Having said that, if this question is important enough you may want to consult with a consumer attorney, because there are circumstances where the transaction will be deemed a loan subject to the usury laws despite being documented as a retail installment sale, on the theory that the latter is a fiction. For example, where car dealers execute installment sale contracts that are immediately assigned to a bank, courts sometimes will hold that the transaction is really a loan from the bank and documenting it as an installment sale is just a sham to avoid the usury limit. If there is an argument to be made that the usury limit applies, then the limit would be 16% currently in New York.

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