Can A Usury Savings Clause Save The Lender?

Law360, New York (September 12, 2011, 9:36 AM EDT) -- Usury savings clauses are commonly found in loan agreements. These clauses attempt to negate the effect of interest payable under a financing arrangement that may result in the imposition of usurious charges. The usury savings clause basically recharacterizes as principal interest payments made by a borrower, should such payments exceed the permissible rate set by state law.

Lenders often assume that the use of such a clause "saves" the lender from liability arising from the imposition of interest charges ultimately determined to exceed the maximum allowed...
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