Alabama Constitution Section 252 Maximum rate of interest
Alabama Constitution – Section 252: Maximum Rate of Interest
Text of Section 252:
"The legislature shall have the authority to set the maximum rate of interest that may be charged in this state and may establish different maximum rates for different classes of transactions; but in the absence of legislation fixing a maximum rate of interest, the rate of interest shall not exceed eight percent per annum."
Explanation:
This section gives the Alabama Legislature the power to set legal limits on interest rates that can be charged within the state.
Key Points:
Legislative Authority:
The legislature can pass laws setting maximum interest rates.
It may set different maximum rates for different types of transactions, such as:
Consumer loans
Business loans
Credit cards
Mortgages
Default Interest Rate Cap:
If no such law exists, the default maximum interest rate is 8% per year.
This serves as a constitutional ceiling in the absence of specific legislative action.
Purpose:
To protect borrowers from usurious (excessively high) interest rates.
To allow flexibility for the legislature to adapt to changing economic conditions by creating interest rate categories based on the nature of financial transactions.
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