Legal Interest Rate Disclosure

LEGAL INTEREST RATE DISCLOSURE

This Legal Interest Rate Disclosure (the "Disclosure") is made as of by and between Lender Name: with principal address: and Borrower Name: with principal address: (collectively, the "Parties").

RECITALS

WHEREAS, Lender and Borrower have entered into a credit agreement, evidencing a financial obligation for Borrower in the principal amount of $ (the "Loan");

WHEREAS, the Parties desire to disclose in writing the interest rate terms, methods of calculation, default rates, and other material interest-related provisions applicable to the Loan; and

WHEREAS, this Disclosure is provided to ensure compliance with applicable usury, consumer protection, and contract law and to confirm Borrower’s informed consent to the interest terms set forth herein.

NOW, THEREFORE, in consideration of the mutual covenants and promises contained herein and other good and valuable consideration, the receipt and sufficiency of which are acknowledged, the Parties agree as follows:

1. DEFINITIONS

For the purposes of this Disclosure, the following terms shall have the meanings ascribed below:

a) "Nominal Rate" means the stated interest rate on the principal balance, expressed as an annual percentage: .

b) "Annual Percentage Rate (APR)" means the cost of credit on a yearly basis, taking into account interest and certain finance charges, as required by applicable law: APR disclosed as .

2. DISCLOSED INTEREST RATES AND CALCULATION

2.1 Stated Interest Rate. The Loan shall bear interest at the Nominal Rate specified above unless adjusted pursuant to Section 2.4. Interest shall be computed in accordance with the method elected in Section 2.2.

2.2 Interest Calculation Method (select one or both as applicable):
Simple interest calculated on the unpaid principal balance. Compound interest compounded .

2.3 Periodic Rate and Computation. The periodic rate equals the Nominal Rate divided by the number of periodic accrual periods per year. Interest accrues from the date funds are disbursed until paid in full. Example computation method or formula: interest = unpaid principal × periodic rate × number of periods outstanding. Any rounding conventions applicable are those ordinarily used in commercial lending.

2.4 Adjustable Rate Terms. If the rate is adjustable, the initial index or base rate is and the margin is . Rate adjustments shall occur no more frequently than every months and shall be subject to any periodic and lifetime caps of and respectively.

2.5 Default Rate. Upon the occurrence of an event of default specified in the underlying credit agreement, the interest rate applicable to the outstanding principal shall increase to a default rate equal to or by adding to the Nominal Rate, whichever method is set forth in the governing credit documents. Such increase will apply from the date specified in the credit agreement until the default is cured or otherwise resolved.

2.6 Interest on Fees. Any finance charge, service fee, late fee, or other fee that constitutes interest under applicable law is included in the APR and will be charged as stated in the credit agreement. Fees that are not interest for legal purposes shall be applied separately as described in the underlying agreement.

3. USURY AND COMPLIANCE

3.1 Usury Compliance. The Parties represent and warrant that the rates and charges described in this Disclosure are intended to comply with applicable usury and rate‑limiting laws. If any interest rate or charge exceeds the maximum permitted by applicable law, such rate or charge shall be reduced to the maximum lawful rate, and any provision to the contrary in the governing instruments shall be deemed modified accordingly.

3.2 Remedies. The adjustment described in Section 3.1 is the sole and exclusive remedy for any usury violation, unless otherwise required by statute.

4. NOTICE OF RATE CHANGES

4.1 Written Notice. If the Nominal Rate or APR is adjusted, Lender shall provide Borrower with written notice specifying the new rate, the effective date of the change, the method of calculation, and any resulting periodic payment changes no fewer than days prior to the effective date, except as otherwise provided by law.

4.2 Emergency Adjustments. Notwithstanding Section 4.1, rate changes required by operation of law or a material economic event may be effective upon the earliest date permitted by applicable law, in which case Lender shall give notice as soon as practicable.

5. REPRESENTATIONS AND BORROWER ACKNOWLEDGMENT

5.1 Borrower Representation. Borrower represents that Borrower has received this Disclosure prior to or contemporaneously with execution of the underlying credit documents and has had a reasonable opportunity to review and ask questions regarding the interest rate, APR, fees, and methods of computation.

5.2 Acknowledgment. By signing below, Borrower acknowledges receipt of a clear statement of the Nominal Rate, APR, the method of calculating interest, any applicable periodic or lifetime caps, and the existence of a default rate, if any.

6. NOTICES

All notices required or permitted to be given under this Disclosure shall be in writing and delivered to the respective addresses set forth below (or to such other address as a Party designates by written notice). Notice is effective upon actual receipt or, if mailed, three business days after deposit in the United States mail, postage prepaid:

7. DEFAULTS, REMEDIES AND ACCELERATION

7.1 Events of Default. Events constituting default and the remedies available to Lender shall be as defined in the underlying credit instrument. Upon default, interest may accrue at the Default Rate and Lender may seek acceleration, collection costs, attorneys' fees, and other remedies permitted by law and by the credit agreement.

7.2 Acceleration. If the Loan is accelerated in accordance with the credit agreement, interest at the applicable rate shall continue to accrue on the accelerated amount until payment in full, to the extent permitted by law.

8. MISCELLANEOUS

8.1 Governing Law. This Disclosure shall be governed by and construed in accordance with the substantive law of the state designated in the underlying credit agreement: , without regard to conflict of law rules.

8.2 Entire Agreement. This Disclosure and the underlying credit documents contain the entire agreement of the Parties with respect to the subject matter hereof. To the extent of any conflict between this Disclosure and the underlying credit documents, the underlying credit documents shall govern unless this Disclosure expressly states otherwise.

8.3 Severability. If any provision of this Disclosure is held invalid or unenforceable, such provision shall be struck and the remaining provisions shall remain in full force and effect.

8.4 Amendments; Waiver. No amendment, modification, or waiver of any provision of this Disclosure shall be effective unless in writing and signed by both Parties. A waiver by either Party of any breach shall not operate as a waiver of any subsequent breach.

8.5 Counterparts. This Disclosure may be executed in counterparts, each of which shall be deemed an original and all of which together shall constitute one instrument. Facsimile or electronically transmitted signatures shall be treated as original signatures.

ACKNOWLEDGMENT AND SIGNATURE

The undersigned hereby acknowledge receipt of this Legal Interest Rate Disclosure, certify that the terms stated above have been disclosed, and agree that the rates and methods described herein shall control to the extent provided in the governing credit documents.

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