Georgia usury laws set interest rate limits on a sliding scale tied to the size of the loan: 7% per year on any loan with no written contract, 16% per year on written loans of $3,000 or less, and whatever the parties negotiate on larger written loans. A separate criminal statute makes charging more than 5% per month a misdemeanor on any loan. A lender who exceeds the civil limits forfeits all interest on the loan, though the borrower still owes the principal.
Interest Rate Limits by Loan Size
Georgia Code 7-4-2 sets four tiers, and the tier depends on whether the loan is in writing and how much money is involved.1Justia. Georgia Code 7-4-2 – Legal Rate of Interest; Maximum Rate of Interest Generally; Certain Items Not Considered Interest
- No written contract, any amount: 7% per year, simple interest. A handshake loan cannot legally carry more.
- Written contract, $3,000 or less: 16% per year, simple interest, unless a separate Georgia lending statute authorizes a different rate.
- Written contract, more than $3,000 but less than $250,000: any rate the parties agree to, expressed in simple interest terms. No statutory ceiling.
- Written contract, $250,000 or more: any rate, expressed in any terms. Essentially no restriction.
The result is that Georgia’s civil interest cap does real work only at the bottom of the market. Once a loan is documented and exceeds $3,000, the parties are free to negotiate whatever rate they want.
The 5% Per Month Criminal Ceiling
Above the civil tiers sits an absolute limit. Under Georgia Code 7-4-18, charging more than 5% per month — the equivalent of 60% per year — on any loan is a misdemeanor, regardless of whether the loan is written or how large the principal is.2Justia. Georgia Code 7-4-18 – Criminal Penalty for Excessive Interest
The statute reaches every method of extracting the excess: commissions, discounts, fees labeled as something other than interest, and any other arrangement designed to disguise the true cost. Licensed pawnbrokers are the only carve-out and follow their own fee schedule under a separate part of Georgia law.
Even in the tiers where parties can negotiate freely, no lender can cross 5% per month without exposure to prosecution. The criminal penalty runs alongside the civil forfeiture rule, not instead of it.
What a Lender Forfeits for Charging Too Much
Under Georgia Code 7-4-10, a lender who charges usurious interest forfeits the entire interest on the loan — not just the excess above the legal rate, but every dollar of interest charged or contracted for.3Justia. Georgia Code 7-4-10 – Usury Forfeits Entire Interest; Right of Setoff; How Forfeiture Discharged; When Time Bars Action or Defense
That forfeiture is the entire civil penalty. The statute states that “no further penalty or forfeiture shall be occasioned, suffered, or allowed.” Georgia does not authorize double damages, treble damages, or recovery of attorney fees in usury cases.
A few rules shape how the forfeiture plays out:
- If the lender sues to collect, the borrower can raise the forfeited interest as a setoff against the principal owed.
- The parties cannot contract around the forfeiture unless the lender actually pays back the full amount of the forfeited interest.
- Any action or defense based on usury forfeiture must be brought within one year.
The principal still has to be paid. Usury costs the lender its profit; it does not erase the debt.
Charges That Don’t Count as Interest
Two categories of fees sit outside the usury calculation, which means a lender can collect them on top of the stated rate without triggering a violation.
Origination fees and discount points on a loan secured by real property are not treated as interest under Georgia Code 7-4-2.1Justia. Georgia Code 7-4-2 – Legal Rate of Interest; Maximum Rate of Interest Generally; Certain Items Not Considered Interest Overdraft charges, nonsufficient-funds fees, returned payment charges, stop payment charges, and ATM fees agreed to in a written deposit account agreement are also excluded from interest under both the general and criminal usury statutes.2Justia. Georgia Code 7-4-18 – Criminal Penalty for Excessive Interest
The practical effect: a rate that looks compliant can still produce a high total cost once permitted fees are stacked on. The law allows this as long as the fees fall into a recognized category.
Small Loans, Licensing, and the Payday Lending Ban
Georgia treats loans of $3,000 or less as a regulated category. Under O.C.G.A. § 16-17-1 et seq., it is illegal to operate a business making loans at or below that amount without qualifying for a specific exemption, and payday lenders do not qualify.4Georgia Department of Banking and Finance. Consumer Guidance on Unlicensed Installment Lending
Lenders who want to make small loans legally must obtain a license under the Georgia Installment Loan Act. Licensed installment lenders can offer loans for up to 36 months and 15 days and may charge interest up to 10% per year of the face amount of the contract.
The consequence for lending in this range without a license is severe. Any loan under $3,000 made by an unlicensed entity is void, which means the lender has no legal right to collect the principal, interest, or any fees.4Georgia Department of Banking and Finance. Consumer Guidance on Unlicensed Installment Lending If you borrowed from an unlicensed small-loan lender, you may owe nothing at all.
Why Bank and Credit Card Rates Often Exceed These Limits
Georgia’s rate rules apply to private lenders, hard money lenders, and individuals making personal loans. They largely do not apply to the banks and credit unions where most people actually borrow, because federal statutes override state caps for federally regulated institutions.
Under 12 U.S.C. § 85, a national bank may charge interest at the rate allowed by the state where the bank is located, not the state where the borrower lives.5Office of the Law Revision Counsel. 12 USC 85 – Rate of Interest on Loans, Discounts and Purchases The Supreme Court’s 1978 Marquette decision confirmed this reading, which is why credit card issuers headquartered in states with no rate ceiling can lend to Georgia residents at rates Georgia law would not permit.
State-chartered banks with FDIC insurance have parallel authority under 12 U.S.C. § 1831d, which lets them charge the rate allowed by their home state or 1% above the Federal Reserve discount rate on 90-day commercial paper, whichever is greater, and expressly preempts contrary state law.6Office of the Law Revision Counsel. 12 USC 1831d – State-Chartered Insured Depository Institutions and Insured Branches of Foreign Banks
Federal credit unions normally face a 15% ceiling under the Federal Credit Union Act, but the NCUA Board can raise it. As of February 2026, the NCUA extended a temporary 18% ceiling through September 2027.7National Credit Union Administration. NCUA Board Extends Loan Interest Rate Ceiling
Extra Protection for Active-Duty Military Borrowers
The federal Military Lending Act caps the Military Annual Percentage Rate at 36% on covered consumer loans to active-duty service members and their dependents. The MAPR includes interest, fees, credit insurance charges, and debt cancellation costs, so a lender cannot slide extra cost into fees to escape the cap.8National Credit Union Administration. Military Lending Act (MLA)
The MLA also bans prepayment penalties and mandatory arbitration clauses in covered loans. A loan agreement that violates these rules is void from the start, and the lender cannot enforce it. For military families borrowing in Georgia, this federal floor sits below Georgia’s usury framework and operates independently of it.