West Virginia Loan Agreement
A West Virginia loan agreement sets the loan terms and caps interest on a private written loan at 8 percent per year, with a 6 percent legal rate if none is agreed.
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Introduction
Under a loan agreement a borrower repays money a lender advances, usually with interest, on terms both sign, and West Virginia holds a plain private written loan to a low 8 percent a year. In West Virginia the interest a private lender can charge is low and capped. Under W. Va. Code Section 47-6-5, the legal rate absent a written contract is 6 percent per year, and parties may contract in writing for interest at a rate not to exceed 8 percent per year, so a plain private written loan is held to 8 percent. Only regulated consumer lenders licensed under the Consumer Credit and Protection Act may charge more. Making an occasional private loan does not require a license: a regulated consumer lender license is required only to engage in the business of making regulated consumer loans, meaning consumer loans at a finance charge above 18 percent by a person regularly engaged in lending (W. Va. Code Section 46A-4-101), which a one-off personal loan is not. Once the rate is set, a sound West Virginia 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: a lawsuit on a signed written contract can be brought for ten years in West Virginia (W. Va. Code Section 55-2-6), and a clear signed agreement is what protects both sides if the loan is later disputed. DocDraft builds your West Virginia loan agreement from your facts, with attorney review available before you sign.
Key Things to Know
- 1
A loan agreement is the signed record of a private loan's amount, rate, schedule, and default terms. West Virginia keeps the interest on an ordinary written loan low, at no more than 8 percent a year.
- 2
West Virginia holds a private written loan to a low cap. Parties may contract in writing for interest at a rate not to exceed 8 percent per year (W. Va. Code Section 47-6-5(b)). Only regulated consumer lenders licensed under Chapter 46A may charge more, so keep a private loan at or below 8 percent.
- 3
If a West Virginia loan is not made in writing, the legal rate is 6 percent per year (W. Va. Code Section 47-6-5(a)). To charge above 6 percent, up to the 8 percent maximum, you need a written contract that states the rate.
- 4
You do not need a license to make an occasional private loan. A regulated consumer lender license is required only to engage in the business of making regulated consumer loans, meaning consumer loans at a finance charge over 18 percent by a person regularly engaged in lending (W. Va. Code Section 46A-4-101). A one-off personal loan is not that business.
- 5
The two rules work together. A private lender cannot charge more than 8 percent by written contract, and charging the higher rates that require a Chapter 46A license without one is unlawful, so keep a private loan at or below 8 percent and state the rate clearly.
- 6
A late fee should be reasonable. West Virginia sets no flat statutory late-fee cap for a private loan, so tie any late charge to your real costs from a late payment; an amount that operates as an unreasonable penalty may not be enforced.
- 7
Put the loan in writing and spell out default and acceleration. Define default as a payment missed past a stated grace period, and include an acceleration clause so the lender can demand the entire unpaid balance at once if the borrower defaults. A lawsuit on a signed written contract can be brought for ten years (W. Va. Code Section 55-2-6).
Key decisions before you file
Before you file a Loan Agreement in West Virginia, 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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West Virginia Requirements for Loan Agreement
West Virginia holds a private written loan to a low cap. Parties may contract in writing for interest at a rate not to exceed 8 percent per year (W. Va. Code Section 47-6-5(b)). State the rate as a number and keep a private loan at or below 8 percent. Only regulated consumer lenders licensed under the Consumer Credit and Protection Act may charge more, within their own statutory limits.
If a West Virginia loan is not made in writing or does not state a rate, the legal rate is 6 percent per year (W. Va. Code Section 47-6-5(a)). To charge above 6 percent, up to the 8 percent maximum, you need a written contract that states the agreed rate. Always write the agreed rate into the agreement so the 6 percent default does not apply by accident.
A West Virginia regulated consumer lender license is required only to engage in the business of making regulated consumer loans, meaning consumer loans at a finance charge above 18 percent by a person regularly engaged in lending (W. Va. Code Section 46A-4-101). An individual who makes an occasional personal loan is not in that business, and a private loan cannot exceed 8 percent by written contract anyway, so no license is needed. Confirm your status with the Division of Financial Institutions before lending as a business.
A private lender in West Virginia cannot charge more than 8 percent by written contract (W. Va. Code Section 47-6-5), and the higher rates that a Chapter 46A regulated consumer lender may charge require a license. Charging above 8 percent without that license is unlawful, so keep a private loan at or below 8 percent, state the rate clearly, and do not attempt to charge licensed-lender rates as a private individual.
West Virginia sets no flat statutory late-fee cap for a private one-off loan, so a late charge is judged under general contract law. Set any late fee as a reasonable estimate of the lender's actual costs from a late payment rather than an arbitrary penalty, because an amount that operates as a penalty may not be enforced. State the late fee and any grace period clearly in the agreement.
A loan need not be written to be enforceable in West Virginia, but a written contract is required to charge interest above the 6 percent legal rate, up to the 8 percent maximum (W. Va. Code Section 47-6-5). A written contract also carries a ten-year period to sue, far longer than for an unwritten contract. Have both parties sign and date the agreement and keep a copy.
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.
A lawsuit to collect on a signed written loan agreement must generally be filed within ten years in West Virginia (W. Va. Code Section 55-2-6), one of the longer periods in the country. An unwritten contract carries a shorter five-year limit. Keeping a signed written agreement gives the longer, easier-to-prove period if you have to collect.
Frequently Asked Questions
A loan agreement is a written contract in which a lender lends money to a borrower who promises to repay it, usually with interest, on an agreed schedule. In West Virginia it should name the parties, the principal, the interest rate as a number, the repayment dates, any late fee, and what counts as default. Because West Virginia caps a private written loan at 8 percent per year (W. Va. Code Section 47-6-5) and applies a 6 percent legal rate when none is agreed, stating the rate in writing matters. A signed written contract can also be enforced for ten years.
For a private written loan, the maximum is 8 percent per year. Under W. Va. Code Section 47-6-5(b), parties may contract in writing for interest at a rate not to exceed 8 dollars upon 100 dollars for a year. Only regulated consumer lenders licensed under the Consumer Credit and Protection Act may charge more within their statutory limits, so a private lender in West Virginia is held to 8 percent.
A loan does not have to be in writing to be enforceable in West Virginia, but a written contract is required to charge interest above the 6 percent legal rate, up to the 8 percent maximum (W. Va. Code Section 47-6-5). A written contract also carries a ten-year period to sue, longer than the five years for an unwritten contract (W. Va. Code Section 55-2-6), so a signed agreement is strongly advised and protects both sides.
Not for a one-off private loan. A West Virginia regulated consumer lender license is required only to engage in the business of making regulated consumer loans, meaning consumer loans at a finance charge above 18 percent by a person regularly engaged in lending (W. Va. Code Section 46A-4-101). An individual who makes an occasional personal loan is not in that business, and a private loan cannot exceed 8 percent by written contract anyway, so no license is needed.
Charging more than the lawful rate makes the interest usurious in West Virginia, and interest above the limit is not enforceable. Because a private written loan is capped at 8 percent (W. Va. Code Section 47-6-5) and only licensed regulated consumer lenders may charge more, a private lender who exceeds 8 percent risks losing the excess interest and being treated as an unlicensed lender. The safest course is to keep the rate at or below 8 percent and state it clearly.
If a West Virginia loan is not made in writing or does not state a rate, the legal rate is 6 percent per year under W. Va. Code Section 47-6-5(a). That default applies because the parties did not contract in writing for a rate. To charge above 6 percent, up to the 8 percent maximum, you must have a written contract that states the agreed rate.
Yes, if the fee is reasonable. West Virginia sets no flat statutory late-fee cap for a private one-off loan, so a late charge is judged under general contract law: it should be a reasonable estimate of the lender's actual costs from a late payment, not an arbitrary penalty. State the late fee and any grace period clearly in the West Virginia loan agreement so both sides know the terms.
For a signed written loan agreement, you generally have ten years from the default to sue in West Virginia (W. Va. Code Section 55-2-6), one of the longer periods in the country. An unwritten contract carries a shorter five-year limit. Because the written period is much longer and easier to prove, keeping a signed loan agreement gives you a strong position if you have to collect.