Personal Loans in Arkansas: The 17% Limit and Who It Binds

How the Arkansas rate limit works

The limit is a flat yearly rate, with no tiers by loan size. Voters approved it as Issue No. 2 in November 2010, and it took effect on January 1, 2011, as Amendment 89. Section 3 sets the 17% ceiling on loans or contracts. Arkansas Code 4-57-104 lets the parties agree in writing to any rate up to the limit in Amendment 89, and Section 4-57-105 bars anyone from taking more, directly or indirectly.

The National Consumer Law Center, which compares state caps, puts the Arkansas ceiling at 17% APR with fees included for a $500, a $2,000 and a $10,000 loan. If an offer from a non-bank lender shows an APR above 17% on its Truth in Lending disclosure, ask the lender to explain under what authority it charges that rate.

Banks, credit unions and online lenders

The 2010 ballot measure set the limit for federally insured depository institutions at the rate that results from federal preemption. In practice, a bank or credit union may charge the rate federal law allows it, which for a bank is the rate its home state permits.

• Banks and credit unions are supervised by banking regulators and may charge more than 17% on a personal loan.
• Online lenders that partner with a bank may make loans through that bank, which can put an Arkansas loan above 17%. Ask who the lender of record is.
• Non-bank lenders lending in their own name are held to the 17% limit. We could not find a separate state license for non-bank personal installment lenders; ask any lender which law it lends under.
• Payday and title loans are covered by our sister site Lendmira on its Arkansas lending laws page.

What to compare on an Arkansas offer

Because banks and non-bank lenders play by different rules here, the same loan can carry very different prices. Put every offer on the same footing before you choose.

• The APR and the total of payments from each Truth in Lending disclosure, not the monthly payment alone. The offer comparison calculator sets two offers side by side.
• Any fee taken from the loan. A fee deducted up front means less reaches your account and raises the APR.
• A credit union loan. Credit unions also lend under federal rules rather than the 17% limit. Ask a credit union you can join for its personal loan rate and compare it with the other offers.
• The term. A longer term lowers the payment but raises the total interest, even at the same rate.

How Arkansas compares with its neighbors

On the National Consumer Law Center's comparison of a $2,000 two-year loan from a licensed non-bank lender, Arkansas's 17% is far below its neighbors: Texas allows about 37% APR, Louisiana about 38%, Tennessee about 49%, Oklahoma about 56% and Mississippi about 59%, and Missouri has no cap. If you live near a state line, your state of residence and the lender's license decide which rules apply. The state rules map shows every state side by side.

Check a lender and file a complaint

1. 1 Ask who the lender of record is and whether it is a bank. For a non-bank lender, compare the APR with the 17% limit.
2. 2 Check the lender's registration in NMLS Consumer Access, where many non-bank lenders list their state licenses; how to verify a lender shows what to look for.
3. 3 Keep the loan papers: the Truth in Lending disclosure, the agreement and any messages about fees.
4. 4 File a complaint with the Arkansas Attorney General's Consumer Protection Division online at arkansasag.gov or at (800) 482-8982, and with the CFPB if the lender is a bank or a bank partner.

Questions people ask