Oregon Loan Agreement
An Oregon loan agreement sets the loan terms and caps interest on a loan of 50,000 dollars or less at the greater of 12 percent or 5 points over the Fed rate.
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Introduction
Put in writing, a loan between an Oregon lender and borrower becomes a loan agreement that fixes the amount, the repayment schedule, and interest that on a loan of 50,000 dollars or less cannot exceed the greater of 12 percent per year or a commercial-paper rate. In Oregon the interest you can charge is capped on smaller loans. Under ORS 82.010, a loan of 50,000 dollars or less may not charge more than the greater of 12 percent per year or 5 percent per year over the discount rate on 90-day commercial paper set by the Federal Reserve Bank; a loan of more than 50,000 dollars is not subject to that statutory cap. If a written agreement does not state a rate, Oregon law fills the gap at the legal rate of 9 percent per year (ORS 82.010(1)). Charging more than the cap is costly: a lender who exceeds it forfeits the right to collect any interest, and the borrower repays only the principal (ORS 82.010(4)). Making an occasional private loan does not by itself require a license: the consumer finance license under ORS 725.045 applies to conducting a business of making consumer finance loans, which the Division of Financial Regulation oversees, so a one-off personal loan is not licensed. Once the rate is set, a sound Oregon loan agreement names the parties, the principal, the interest rate as a number, the repayment schedule, any late fee, and what counts as default. It should include an acceleration clause, which lets the lender demand the entire unpaid balance at once if the borrower misses payments. Put the terms in writing: an action on a contract can be brought for six years (ORS 12.080), and a clear signed agreement is what protects both sides if the loan is later disputed. DocDraft builds your Oregon loan agreement from your facts, with attorney review available before you sign.
Key Things to Know
- 1
A loan agreement, plainly, sets out how much an Oregon borrower owes, when it is due, and the interest charged, which on a loan of 50,000 dollars or less is capped at the greater of 12 percent per year or a Federal Reserve commercial-paper rate.
- 2
Oregon caps interest on smaller loans. Under ORS 82.010(3), a loan of 50,000 dollars or less may not charge more than the greater of 12 percent per year or 5 percent per year over the discount rate on 90-day commercial paper set by the Federal Reserve Bank. A loan of more than 50,000 dollars is not subject to this statutory cap.
- 3
If a written loan agreement does not state an interest rate, Oregon sets the legal rate at 9 percent per year (ORS 82.010(1)). To charge more than 9 percent, up to the applicable cap on a loan of 50,000 dollars or less, you need a written agreement that states the rate.
- 4
You do not need a license to make an occasional private loan. The consumer finance license under ORS 725.045 applies to conducting a business of making consumer finance loans of 50,000 dollars or less, overseen by the Division of Financial Regulation. An individual making a one-off personal loan is not conducting that business and generally is not licensed.
- 5
Charging over the limit is costly. A lender who charges more than the ORS 82.010(3) cap forfeits the right to collect or receive any interest on the loan, and the borrower repays only the principal (ORS 82.010(4)). Keep a private loan at or below the cap unless you are an exempt or licensed lender.
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Oregon does not set a specific statutory cap on a late fee for a private written loan. Keep any late charge a reasonable estimate of your actual costs from a late payment rather than an arbitrary penalty, and state it clearly in the agreement.
- 7
Spell out default and acceleration, and mind the deadline to sue. Define default (usually a missed payment past a stated grace period), include an acceleration clause so the lender can demand the entire unpaid balance at once, and note that an action on a contract must generally be brought within six years in Oregon (ORS 12.080).
Key decisions before you file
Before you file a Loan Agreement in Oregon, a few decisions shape the document: which option to choose and what each one means. The Loan Agreement guide walks through them.
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Oregon Requirements for Loan Agreement
Maximum Interest Rate (Usury Cap)
Oregon caps interest on smaller loans. Under ORS 82.010(3), a loan of 50,000 dollars or less may not charge more than the greater of 12 percent per year or 5 percent per year over the discount rate on 90-day commercial paper set by the Federal Reserve Bank. The cap reaches both ordinary personal loans and business or agricultural loans at or below 50,000 dollars. A loan of more than 50,000 dollars is not subject to this statutory cap. State the rate as a number and keep a covered loan at or below the cap unless you are exempt or licensed.
Legal Rate When the Contract Is Silent
If a loan agreement does not state an interest rate, Oregon law fixes the legal rate at 9 percent per year (ORS 82.010(1)). To charge a different rate, up to the applicable cap on a loan of 50,000 dollars or less, the parties must agree to the rate in a written, signed agreement. Always write the agreed rate into the agreement so the 9 percent default does not apply by accident.
Lender Licensing (Consumer Finance License)
A consumer finance license under ORS 725.045 is required of a person who conducts a business of making consumer finance loans of 50,000 dollars or less, which the Division of Financial Regulation within the Department of Consumer and Business Services oversees. An individual making an occasional private loan is not conducting that business and generally does not need a license. If you lend money repeatedly as a business, confirm whether you must be licensed before you lend.
Penalty for Charging Over the Limit
Charging above the ORS 82.010(3) cap makes the interest usurious. Under ORS 82.010(4), a lender who charges a greater rate than allowed forfeits the right to collect or receive any interest on the loan, and the borrower is required to repay only the principal borrowed. This is a heavy penalty, so keep a private loan of 50,000 dollars or less at or below the greater of 12 percent or 5 percent over the Federal Reserve discount rate unless you are an exempt or licensed lender.
Exempt Lenders and Larger Loans
The ORS 82.010(3) cap applies to private lenders, not to every loan. Financial institutions, persons licensed under ORS Chapter 725, and loans secured by real property are among the classes exempt from the rate limit under ORS 82.025, which is why a licensed consumer finance lender can lawfully charge more. In addition, a loan of more than 50,000 dollars falls outside the ORS 82.010(3) cap entirely. Confirm which situation applies before setting a rate above the cap.
Late Fees
Oregon does not set a specific dollar or percentage cap on a late fee for a private written loan of the kind this page covers. You may include a late charge, but keep it a reasonable estimate of the lender actual costs from a late payment rather than an arbitrary penalty, and state it clearly in the agreement. Licensed consumer finance lenders face separate statutory charge limits under ORS Chapter 725 that do not govern a one-off private loan.
Default and Acceleration
Define default clearly, usually a payment missed past a stated grace period, a broken promise in the agreement, or the borrower insolvency. Include an acceleration clause so that on default the lender may declare the entire unpaid balance of principal and accrued interest immediately due. Stating any required notice and cure period avoids disputes about whether acceleration was proper.
Time Limit to Sue on the Debt
An action upon a contract or liability, express or implied, must generally be commenced within six years in Oregon (ORS 12.080), running from the borrower default or last payment. Oregon applies this six-year period to a contract debt whether the promise was written or oral, so it does not draw the shorter oral-versus-written split some states use. Keeping a signed written agreement still makes the amount and terms far easier to prove if you have to collect.