Opinion ID: 2612211
Heading Depth: 3
Heading Rank: 3

Heading: Duration of the Loan.

Text: The lower court held that the amounts of interest paid by Collins must be amortized over the life of the loan as originally provided in the promissory note and other loan documents. Collins, however, challenges that ruling, arguing that for the purposes of usury calculations, interest should be prorated over the actual life of the loan, i.e., from the inception of the loan to the date of default or that interest should be calculated for each year of the loan. Collins ignores a fundamental principle of usury law  that [t]he usurious character of a transaction is determined as of the time of its inception. Curtis v. Securities Acceptance Corp., 166 Neb. 815, 91 N.W.2d 19, 26 (Neb. 1958) (emphasis added). The actual life of the loan is not to be considered when determining whether a loan is usurious. Watson Const. Co. v. Amfac Mortgage Corp., 124 Ariz. 570, 606 P.2d 421 (Ariz. App. 1979). Nevertheless, Collins contends that NRS 99.050 (1973) should be interpreted to mean that if interest charged on a loan exceeds 12% of the outstanding principal for any one year, then the loan is usurious. Although NRS 99.050 (1973) provides that a contracted rate of interest may not exceed the rate of 12% per annum, that statute does not mean that the interest rate cannot exceed 12% annually or 12% for any one year. The words twelve percent per annum refer to the rate of interest and not the time of payment. Montgomery Federal Savings & Loan Ass'n v. Baer, 308 A.2d 768, 771 (D.C. Cir.1973). Thus, interest payments, for the purpose of usury calculations, must be prorated over the entire term of the contract. See Tanner Development Co. v. Ferguson, 561 S.W.2d 777 (Tex. 1977); see also Sharp v. Mortgage Security Corp. of America, 215 Cal. 287, P.2d 819 (Cal. 1932).