HRS §478-5
What happens if a lender charges too much interest
This law says a contract is not automatically invalid just because the interest rate is higher than the law allows. If a court finds the rate was too high, the lender can only get back the principal, and the borrower may recover costs. If interest was already paid, the judgment reduces the principal by that amount.
borrowerscreditorsfinancial institutions
The statute, as written — [OLD] REPEALED
L 1986, c 137, pt of §1. §478-5 Usury not recoverable. If a greater rate of interest than that permitted by law is contracted for with respect to any consumer credit transaction, any home business loan or any credit card agreement, the contract shall not, by reason thereof, be void. But if in any action on the contract proof is made that a greater rate of interest than that permitted by law has been directly or indirectly contracted for, the creditor shall only recover the principal and the debtor shall recover costs. If interest has been paid, judgment shall be for the principal less the amount of interest paid. This section shall not be held to apply to: (1) Loans made by financial services loan companies and credit unions at the rates authorized under and pursuant to articles 9 and 10 of chapter 412; or (2) Any installment loan regulated under chapter 480J. [CC 1859, §1483; am L 1898, c 4, §4; RL 1925, §3588; am L 1931, c 137, §1; RL 1935, §7053; am L 1939, c 75, pt of §1(6782 W); RL 1945, §8734; RL 1955, §191-4; am L 1957, c 95, §1; HRS §478-4; am L 1984, c 253, §10; ren and am L 1986, c 137, pt of §1; am L 1989, c 266, §3; am L 1993, c 350, §26; am L 2021, c 56, §4]
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