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Usury Laws in Alabama

Alabama caps interest on a written loan contract at 8% a year (6% without a written contract), but loans of $2,000 or more can carry any agreed rate.

Last checked . General information, not legal advice.

Alabama at a glance

Maximum agreed rate
8% (written contract)
Loans, forbearances and credit sales with an original principal of $2,000 or more may carry any rate the parties agree to (Ala. Code 8-8-5).
Legal rate (no rate agreed)
6%
6% is the maximum without a written contract. Non-contract judgments bear 7.5%; contract judgments bear the contract rate (Ala. Code 8-8-10).

Sources

Last checked

The rules in Alabama

What is the maximum interest rate on a private loan in Alabama?

Maximum agreed rate in Alabama: 8% (written contract). Loans, forbearances and credit sales with an original principal of $2,000 or more may carry any rate the parties agree to (Ala. Code 8-8-5).

What interest rate applies in Alabama when no rate was agreed?

Legal rate (no rate agreed) in Alabama: 6%. 6% is the maximum without a written contract. Non-contract judgments bear 7.5%; contract judgments bear the contract rate (Ala. Code 8-8-10).

Where do the Alabama usury laws come from?

The rules above come from Ala. Code 8-8-1, Ala. Code 8-8-5, Ala. Code 8-8-10 and Ala. Code 8-8-12. Each source is linked on this page. We last checked them in October 2026.

Good to know

A usurious contract can be enforced only as to the principal, and interest already paid is deducted from the principal (Ala. Code 8-8-12).

What this means in practice

Put the interest rate in writing. Many usury statutes set one limit for written agreements and a different, often lower, rate when nothing was agreed in writing. A signed promissory note or loan agreement that states the rate, the payment schedule and what happens on late payment avoids most disputes.

Count every charge, not only the stated rate. Courts may treat fees, points, required extras or a discount taken from the amount lent as interest when deciding whether a loan is usurious. A loan with a modest rate and large fees can still cross the limit.

Check who the lender is and what the loan is for. Usury limits often do not apply, or apply differently, to banks, licensed consumer lenders, credit card issuers, larger loans and loans to businesses or corporations. A rule written for loans between individuals may not cover your situation, so read the statute and its exceptions.

General information, not legal advice. Laws change, and cities can add their own rules, so check the current statute before you rely on it.