Chapter 15 - Loans

Chapter 15 - Loans

28.1501 Interest rate-Agreements signed and written-Charge for loans.

(a) Except as provided in this title, no person may charge more than 15 percent per year as interest on a debt or obligation, and no agreement to pay a rate of interest higher than 6 percent per year shall be enforceable unless the same is in writing and is signed by the party to be charged. The rate of interest when there is no written agreement with respect thereto shall be 6 percent per year, and such interest shall be presumed on overdue debts.

(b) Lending institutions are empowered to set, from time to time as the cost of money and the cost of lending operations warrant, a minimum charge for their loans where the normal interest is not equal to the average cost of making a loan. In no event may both a minimum charge and interest be collected.

(c) Banks that are authorized and licensed to conduct the business of banking in American Samoa are empowered to charge, contract for, and receive interest on loans at a rate up to 24% per year, provided that:

(1) The principal amount of the loan is $5,000.00 or less, and

(2) The principal amount of the loan and interest rate are disclosed in written agreement that is signed by the parties to be charged.

28.1502 Small loans-Interest.

Any bank, savings and loan association, person, firm, corporation or government entity which has been approved by the Governor as a small loan agency may charge a fee of not more than $8 per $100 per year on loans, debts and obligations of not more than $8,000 with an allowable minimum charge to be fixed in an amount not to exceed a current schedule set by any lending institution under the standards prescribed in subsection (b) of 28.1501. Fees charged under this section are not to be levied in addition to the interest or minimum charge allowed under 28.1501. If any loan under this section is paid before its due date, the lender shall credit to the unpaid balance, or shall refund, unearned interest.

28.1503 Business loans.

It is lawful to charge, contract for, and receive any rate or amount of interest or other compen-sation, not to exceed 18 percent annually, with respect to any loan to any business or commercial organization or to a person or persons owning or desiring to acquire a business as a sole proprietor or joint venture, if the loan is transacted solely for the purpose of carrying on or acquiring a business or commercial investment. Business or commercial organization includes corporations, copartnerships, joint venture, limited partnerships, trusts, and any other bona fide business entity.

28.1505 Open-end credit.

(a) Notwithstanding any other provision to the contrary, the maximum rate of interest chargeable on open-end credit issued in American Samoa shall be determined by reference to the law of the creditor’s principal place of business.

(b) Open-end credit means credit extended by a creditor under a plan which: (1) The creditor reasonably contemplates repeated transactions,

(2) The creditor may impose a finance charge from time to time on an outstanding unpaid balance, and

(3) The amount of credit that may be extended during the term of the plan (up to any limit set by the creditor) is generally made available to the extent that any outstanding balance is repaid.

(c) Creditor means a person who extends credit that is subject to a finance charge.

(d) Person means a natural person or an organization, including a corporation, partnership, proprietorship, association, cooperative, estate, trust, or government unit.

28.1510 Penalty for usury.

Any person who loans money or extends credit in any manner whatsoever and takes, receives, reserves, or assesses interest, fees, or minimum charges thereon at a rate higher than that allowed by law shall upon conviction be sentenced as for a class A misdemeanor; and in addition, shall forfeit to the debtor the full amount of the debt or obligation upon which the unlawful interest, fee, or minimum was charged.