MONEY OF ACCOUNT AND INTEREST – Adds to existing law to provide for interest rates to be allowed by agreement subject to certain limitations.
Summary
House Bill 649 amends Idaho’s money and interest laws by adding a new section to Title 28 that permits parties to a written agreement to set their own interest rate and related fees, so long as the agreed rate does not exceed the greater of 30% or 10 percentage points above the Federal Reserve prime rate. The bill also states that interest must be paid according to the contract terms, and that a loan agreement that was not usurious when made remains lawful for the life of the loan if it is not substantially changed. Renewals are excluded from that protection.
The bill is framed as an amendment to Idaho’s usury framework, but it expressly excludes “regulated lenders” as defined elsewhere in Idaho law, meaning the new rule would apply to certain non-regulated lending arrangements rather than the broader regulated lending market. It includes an emergency clause and would take effect July 1, 2026.
Impact
If enacted, the bill would create a new statutory rule in Chapter 22 of Title 28 allowing higher contractually agreed interest rates and fees within specified limits, while preserving the legality of qualifying loans over time. It would affect borrowers and lenders in private credit transactions, especially those outside the regulated lender category, by clarifying when interest terms are enforceable and when a loan remains lawful despite changes in market rates. The bill would also interact with Idaho’s existing usury laws by setting a specific ceiling tied to the prime rate and by limiting the circumstances under which a loan can lose its lawful status.
Sentiment
Based on the available context, the bill appears to have been treated as a business and lending policy measure rather than a highly controversial proposal. Its referral to the Business Committee suggests it was considered within the normal framework for commercial and financial legislation, and there are no recorded votes or committee transcripts in the provided material indicating strong opposition or support. The overall tone of the bill text is technical and permissive, aimed at clarifying allowable interest terms.
Contention
The main policy issue is the extent to which parties should be allowed to contract for high interest rates and fees, and whether the bill’s ceiling of 30% or 10 points above prime is too permissive or too restrictive. Another potential point of contention is the bill’s exclusion of regulated lenders, which may create different rules for different categories of lenders and could raise questions about fairness, consumer protection, and market competition. The provision preserving the legality of loans that were not usurious when made may also be debated because it protects existing loan terms even if circumstances change, though renewals are excluded.