By: Scott J. Kennelly and Susan Novak
A usury savings clause is a provision in a loan document that attempts to negate any other provisions therein that might result in the extraction of an illegal interest rate. Common examples of savings clauses includes the following:
- Notwithstanding any provisions in this note to the contrary, no interest, charges, or other payments in excess of those permitted by law shall accrue or become payable hereunder and any excessive payments which may be made shall be applied to principal in reduction of the balance of this note.
- In no event shall the amount of interest due or payment in the nature of interest payable hereunder exceed the maximum rate of interest allowed by applicable law, as amended from time to time, and in the event any such payment is paid by the undersigned or received by the Holder, then such excess sum shall be credited as a payment of principal, unless the undersigned shall notify the Holder, in writing, that the undersigned elects to have such excess sum returned to it forthwith.