Usury

Previously I wrote about  Land Contracts and later I wrote Don’t be confused by Interest. In those articles I should have mentioned a term called “usury”. Usury means excessive interest, charging more than the law allows. When it comes to land, the laws that are followed are those of the state in which the land is located.

In Michigan, the criminal usury rate is  25%. The maximum interest rate allowed on seller financing (such as a land contract) is 11%. There are some exceptions.  For example, if the buyer is a business, the rate can be up to 24.99%.

Remember that interest rates on seller financing are negotiated between buyer and seller. Interest rates charged by lenders vary from lender to lender. Shop for the best rate possible.