House Bill No. 5542
House Bill No. 5542
PUBLIC ACT NO. 98-46
AN ACT CONCERNING THE INTEREST RATE ON LOANS TO
CERTAIN BUSINESS ORGANIZATIONS.
Be it enacted by the Senate and House of
Representatives in General Assembly convened:
Section 1. Section 37-9 of the general
statutes is repealed and the following is
substituted in lieu thereof:
The provisions of sections 37-4, 37-5 and 37-6
shall not affect: (1) Any loan made prior to
September 12, 1911; (2) any loan made by (A) any
national bank, or any bank or trust company or
state or federal savings bank incorporated under
the laws of this state, (B) any wholly-owned
subsidiary of such national bank, bank or trust
company or state or federal savings bank, except a
loan for consumer purposes, (C) any federal or
state chartered savings and loan association or
(D) any credit union or federal credit union; (3)
any bona fide mortgage of real property for a sum
in excess of five thousand dollars; (4) any loan
made to a foreign or domestic corporation,
[general or limited] STATUTORY TRUST, LIMITED
LIABILITY COMPANY, GENERAL, LIMITED OR LIMITED
LIABILITY partnership or association organized for
a profit or any individual, provided such
corporation, TRUST, COMPANY, partnership,
association or individual is engaged primarily in
commercial, manufacturing, industrial or
nonconsumer pursuits and provided further that the
funds received by such corporation, TRUST,
COMPANY, partnership, association or individual
are utilized in such entity's business or
investment activities and are not utilized for
consumer purposes and provided further that the
original indebtedness to be repaid is in excess of
ten thousand dollars, or, in the case of one or
more advances of money of less than ten thousand
dollars made pursuant to a revolving loan
agreement or similar agreement or a loan agreement
providing for the making of advances to the
borrower from time to time up to an aggregate
maximum amount, the total principal amount of all
loans owing by the borrower to the lender at the
time of any such advance is in excess of ten
thousand dollars; (5) any obligations, including
bonds, notes or other obligations, issued by (A)
the state, (B) any municipality, including any
city, town, borough, district, whether
consolidated or not, or other public body
corporate, or (C) any authority, instrumentality,
public agency or other political subdivision of
the state or of a municipality; (6) any loan made
by (A) the state, (B) any municipality, including
any city, town, borough, district, whether
consolidated or not, or other public body
corporate, or (C) any authority, instrumentality,
public agency or other political subdivision of
the state or of a municipality; (7) any loan made
for the purpose of financing the purchase of a
motor vehicle, a recreational vehicle or a boat,
carrying an interest rate of not more than (A)
eighteen per cent per annum on loans made on or
after July 1, 1981, and prior to October 1, 1985,
and (B) on loans made on or after October 1, 1985,
and prior to October 1, 1993, (i) sixteen per cent
per annum for new motor vehicles, recreational
vehicles or boats, and (ii) eighteen per cent per
annum for used motor vehicles, recreational
vehicles or boats, payable in four or more
monthly, quarterly or yearly instalments which is
unsecured or in which a security interest is taken
in such property; (8) any loan by an institution
of higher education made to an individual for the
purpose of enabling attendance at such institution
and carrying an interest rate of not more than the
greater of (A) the maximum rate then permitted by
section 37-4, or (B) a rate which is not more than
five per cent in excess of the discount rate,
including any surcharge, on ninety-day commercial
paper in effect from time to time at the federal
reserve bank in the federal reserve district where
such institution is located; (9) any loan made to
a plan participant or beneficiary from an employee
pension benefit plan as defined in the Employee
Retirement Income Security Act of 1974, Public Law
93-406, as from time to time amended. The
provisions of part III of chapter 668 shall not
apply to loans made pursuant to subdivision (7) of
this section. No provision of this section shall
prevent any such bank, trust company or federal or
state chartered savings and loan association,
credit union or federal credit union or other
lender from recovering by an action at law the
amount of the principal and the interest
stipulated or interest at the legal rate, if
interest is not stipulated, in any negotiable
instrument which it has acquired for value and in
good faith without notice of illegality in the
consideration. For the purpose of this section:
"Interest" shall not be construed to include
attorney's fees, including preparation of mortgage
deed and note, security agreements, title search,
waivers and closing fees, survey charges or
recording fees paid by the mortgagor or borrower;
"consumer purposes" shall mean the utilization of
funds for personal, family or household purchases,
acquisitions or uses.
Sec. 2. This act shall take effect from its
passage and shall be applicable to loans made
before, on or after said date.
Approved May 19, 1998