Earlier this Summer, the Arkansas Supreme Court affirmed the effectiveness of the 89th Amendment to the Arkansas Constitution, which was approved by Arkansas voters last November. For consumer credit, the amendment permits creditors other than federally insured depository institutions to charge interest on loans or contracts up to a maximum rate of 17% per annum.
Previously, the Arkansas Constitution only permitted interest at the lesser of (i) 17% per annum or (ii) 5% per annum in excess of the 90-day commercial paper rate announced by the Federal Reserve Bank of St. Louis. Contracts charging a rate exceeding 17% per annum were void as to both principal and interest; contracts charging a rate exceeding the rate in clause (ii) above were void as to unpaid interest.