Usury and Interest

For any loan, indebtedness or obligation other than medical debt, interest shall be at the rate of ten percent a year, unless a different rate is contracted for in writing, in which event any rate of interest may be agreed to. Interest on any judgment other than a judgment on medical debt shall be at of ten percent a year. (A.R.S. § 44-1201) Any lawful charge, fee, cost or expense paid by or due to a lender on behalf of a borrower, with his consent, may be added to the principal amount of a loan made to such borrower. (A.R.S. § 44-1207)

It is still possible to commit usury in Arizona, although the main way to do so is to charge or demand in excess of what is agreed to in the written contract, or to charge more than 10% per annum if there is no written agreement of the borrower/obligor. Weiman v. Roysden, 166 Ariz. 281, 802 P.2d 432 (Ct. App. 1990) and S&N Equipment Co. v. Casa Grande Cotton Fin. Co., 97 F.3d 337 (9th Cir. 1996). Lenders should add language to their agreements in which a borrower/obligor agrees to pay all interest charged and all fees, charges and expenses if re-characterized as “interest” in order to avoid this result.